INPUT COST ANALYSIS
The conflict premium keeps fuel costs elevated; input prices are following with a lag
West Texas Intermediate crude averaged $62 in the eight weeks before the conflict broke out on 28 February, then hit $114.0 by early April. Diesel followed, adding almost a dollar a gallon in the first week of March. The two have moved together all year. Both fell through the spring and bottomed out in early July, WTI at $70.0and diesel at $4.58. Both have climbed since. On 24 August WTI was $86, still well below its April peak, while diesel reached $5.65, a new high for the year.
Fuel costs are climbing again rather than settling, and the summer easing was short-lived. Estimates carried over from the second quarter are likely to be low, with the heaviest pressure on transit-intensive scopes and anything fuel-based.
Source: Bureau of Labor Statistics
Since the conflict began, diesel has averaged $5.22 a gallon, above the record full-year average of $4.99 set in 2022. Across the full year-to-date it has averaged $4.84, held down by a cheap January and February. Net inputs to construction reached 352.1, up 7.9% on 2025. The last time fuel ran this high was 2022, and what happened afterwards is a good barometer for the rest of 2026. Diesel fell 27.0 % over the following three years, from $4.99 to $3.66. Input prices did not follow, going from 321.1 to 326.5.
Both are rising now, however if the conflict in the Middle East resolves and fuel prices come down, relief on total costs will be lagged.
Source: Bureau of Labor Statistics
The labor force is shrinking faster than demand is cooling
The construction workforce reached 8.32m in 2026, up roughly 43,000 from 2024 and 47,000 from 2025. This follows a period of stronger growth, with the workforce expanding by nearly 390,000 between 2022 and 2024. While growth has slowed considerably since then, the labor pool remains near record levels, providing a relatively stable base of available construction capacity
The unemployment rate did not move, averaging 4.2%, against 4.17% in 2025 and 4.13% in 2024. A flat rate on a smaller base means the number of unemployed construction workers fell as well, from about 444,000 to 435,000. Spending was down over the same period and backlog fell, and none of that weakness freed-up workers.
Source: Bureau of Labor Statistics
Wage pressure has rotated to nonresidential trades. Residential wage growth slowed to 1.2% by June 2026 while nonresidential re-accelerated to 5.2%, it fastest since mid-2024, and bids in the growth trades carry the pressure. This means budgeting labor by sector rather than off a national average.
Source: Bureau of Labor Statistics
Openings averaged 253,000 a month over the first half and hit 298,000 in June, hiring ran at its slowest first-half pace since 2014 and quits were the lowest for a first half since the 2020 shutdown. Employers are neither cutting nor backfilling. Jobs sit unfilled, so crews take longer to assemble than a soft market would suggest.
Source: Bureau of Labor Statistics
The materials bill spikes as energy joins metals
Materials prices have risen every month of 2026. The composite ran 9.0% quarter-over-year in Q2, and the monthly reading climbed from 8.9% in June to 10.7% in July, the fastest since 2022. Metals are where the pressure sits, with copper cable up 23.6%, rebar 17.6% and structural steel 12.1%, so metals-heavy bids carry the spike. Fuel is the other half of the story, and it arrives through asphalt, plastics and freight rather than as a line item. Non-metal inputs are quieter, with gypsum down 1.8% and ready-mixed concrete up 2.2%.
Source: Bureau of Labor Statistics
Machinery and equipment inflation cools despite the tariff backdrop
Equipment costs have avoided the broader tariff spike. The machinery PPI rose 2.6% year-over-year in Q2, down from 5.3% at the end of 2025, with cranes and forklifts negative. Excavators rose just 2.1%, and generators, the data-center bellwether, slowed to 2.4% from 5.2% in Q1. Equipment is one of the few budget lines that will hold in 2026. Fleet costs move on fuel, not on machine prices.
Source: Bureau of Labor Statistics
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