Input Prices Rise, Construction Spending Slips in December 2025

Tariffs on key materials like steel, aluminum, and copper drive up costs, while overall construction spending declines year-over-year

Published on Mar. 2, 2026

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Input prices for new nonresidential construction rose 0.7% in January 2026 and 2.9% year-over-year, according to producer price index (PPI) data from the Bureau of Labor Statistics. The increases were driven by sharp price gains for materials like aluminum, steel, and copper, which were impacted by tariffs. Meanwhile, overall construction spending in December 2025 totaled $2.17 trillion at a seasonally adjusted annual rate, up 0.3% from November but down 0.4% year-over-year.

Why it matters

The rising input prices, particularly for key construction materials affected by tariffs, are putting pressure on construction firms and could lead to higher costs for projects. At the same time, the overall decline in construction spending year-over-year suggests a potential slowdown in the industry, which could impact employment and economic growth.

The details

The year-over-year increases in PPI were the largest since 2022 (aluminum and steel) or 2023 (copper), reflecting the impact of tariffs that were increased in June and August 2025. Prices for construction machinery and equipment also rose 4.7% over the past year. The overall PPI increase was held down by a 12.3% year-over-year decline in the PPI for diesel fuel. In December 2025, private residential construction rose 1.5% for the month but slipped 1.3% year-over-year, while private nonresidential spending fell 0.7% for the month and 1.8% year-over-year. The largest private nonresidential segment, manufacturing construction, declined for the 11th month in a row, by 2.5% for the month and 11.4% year-over-year.

  • Tariffs on aluminum and steel from most countries increased from 25% to 50% on June 4, 2025.
  • A 50% tariff on products containing copper took effect on August 7, 2025.

The players

Bureau of Labor Statistics (BLS)

The federal agency that collects and publishes economic data, including the producer price index (PPI) and construction spending figures.

President Trump

The former U.S. president who imposed the tariffs on key construction materials that are driving up input prices.

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What’s next

President Trump replaced the IEEPA tariffs on Tuesday with a 10% tariff that will remain in effect for 150 days unless overturned by a later court ruling.

The takeaway

The rising input prices driven by tariffs on key construction materials are putting pressure on the industry, while the overall decline in construction spending suggests a potential slowdown. Firms will need to carefully manage costs and project budgets to navigate these challenges.