Benign cost increases despite turbulent trade rhetoric

Of the 24 indices included in Turner & Townsend’s basket of materials, two thirds of the items have decreased in cost in May 2025. Formwork sheeting and lumber were the primary drivers behind the shift downwards as muted residential demand and constrained US exports filtered through into reduced costs in Canada.

Conversely, some copper indices have made gains of late, with several mechanical, electrical and plumbing items increasing in cost. It is worth noting that the monthly data is volatile and open to revision, so the overall rate of change could well soften. Moreover, recent information may not indicate a new trend given the uncertain economic backdrop.

Until recently, oil prices have trended downwards as softer global demand and increased inventories suppressed energy appetites. This has helped settle construction material and component production costs. Conflict escalation in the Middle East, however, has led to a rise in oil costs, and freight costs have similarly picked up as risk premiums increase.

Looking ahead, further volatility should not be discounted. While market jitters can seep into the construction market, the material cost growth environment is a relatively benign one. The full impact of tariffs, counter-tariffs and remittances have yet to be felt, however, with longer lead times becoming more apparent as alternative suppliers are sought.