Tuesday marked the 100th day of President Donald Trump’s second term in office and there are signs of stress and jitters in the US construction industry, with rising prices, falling confidence, and a sharp uptick in abandoned projects.
“Lumber and metals prices shot up in March, while contractors’ inboxes are bulging with ‘Dear Valued Customer’ letters announcing further increases for many products,” said Ken Simonson, chief economist at Associated General Contractors (AGC), in an 11 April note.
“Rapid-fire changes in tariffs threaten to drive prices higher for many essential construction goods,” he added.
The price of materials and services used in nonresidential construction rose 0.4% in March, the third monthly increase in a row, AGC said.
It was the first time since September 2023 that input prices had risen for three consecutive months, and comes after more than a year of stable or falling prices, Simonson said.
Within the 0.4% hike, the prices of steel mill products soared 7.1% in March, while aluminum jumped 5.1%, and lumber and plywood rose 2.7%.
Fast-changing context
AGC issued a caveat, however.
The prices used to calculate the indexes were collected around 11 March.
“Since then,” AGC said, “the administration has imposed new tariffs of 25% on steel and aluminum imports, 25% on many goods from Mexico and Canada, 145% on imports from China, and 10% on most other countries. Additional tariffs on copper and lumber are under review and much higher tariffs on many countries were imposed on April 9 but then suspended for 90 days.”
AGC said new and planned tariffs would increase costs for many construction materials and are likely to lead to higher costs for many private and public sector construction projects.
“Our members are trying to deliver the best value for the public and private sector clients they serve, but it is hard to deliver that best value when you have no idea how much you are going to have to pay for many of the materials required to build projects,” AGC chief executive Jeffrey Shoaf.
‘Materially diminished outlook’
Another employers’ body, Associated Builders and Contractors (ABC), said a survey for its Construction Confidence Index showed members reporting some growth in backlog during March, but that things changed after Trump’s “Liberation Day” global tariff bonanza on 2 April.
ABC conducted its survey between 20 March and 6 April.
ABC Chief Economist Anirban Basu said: “Backlog increased in March and contractors remained optimistic regarding the future, but this largely reflects contractor activity and sentiment prior to April 2, when the most consequential economic policy in several decades was announced.”
But even before 2 April, around 80% of ABC contractors said suppliers had notified them of tariff-related price hikes, and nearly 20% of contractors said projects had been paused or interrupted because of tariffs during March.
“These tariffs have already materially diminished the outlook for construction activity in 2025,” Basu said.
“Many businesses are poised to delay or even cancel planned capital investments given the current business environment and daily market convulsions. Conditions will likely deteriorate further if elevated tariff rates remain in place for any meaningful length of time.”
Sharp rise in abandonments
Cincinnati-based data and software company ConstructConnect’s Project Stress Index for March rose slightly – 1.1% – on February.
The index tracks bid date delays, on-hold activity levels, and project abandonments.
Behind the modest rise of 1.1% was a 9.5% increase in abandonment activity, which more than offset declines in bid date delays (down 0.7%) and on-hold activity (down 8.0%).
The 9.5% rise in March was a sharp reversal from a downward trend in the previous two months. Abandonments fell 14.7% in February and 16.1% in January, in CostructConnect’s analysis.
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