Engineering, Construction Costs Slowed in September

PRESS RELEASE

New York – September 30, 2025 – Engineering and construction costs continued to show gains in September, according to the Engineering and Construction Cost Indicator from PEG and S&P Global Market Intelligence.

The Engineering and Construction Cost Indicator, a leading measure of wage and material inflation for the engineering, procurement and construction sector saw a net decline to 58.6 in September, from 63.0 in August, but continues to represent upward pricing pressure. The sub-indicator for materials and equipment costs increased by 5.2-points to 55.5 while the sub-indicator for subcontractor labor costs decreased to 66.0 in September from 68.5 in August.

The materials and equipment indicator resumed its downward path dating back to April, following short-lived stabilization in August. Eight of the 12 components declined compared to last month, partially offset by increases in three components, alongside one that remained unchanged. Most of the decreases seen in September were relatively large compared to what has been seen in recent months. Copper-based wire and cable saw the largest pullback, decreasing 25.0-points.

This decline was accompanied by milder decreases seen from redi-mix concrete, carbon steel pipe, alloy steel pipe, transformers and shell and tube heat exchangers. These declines were offset by price increases seen from turbines, fabricated structural steel and ANSI pumps and compressors.

“U.S. steel pipe pricing faces downward pressure following the recent tariff-driven price increases,” said Thomas McCartin, Principal Economist, S&P Global Market Intelligence. “Tariffs lift production costs and import prices, but U.S. domestic pricing remains far higher than other regions, and demand from the energy sector is too weak to sustain current prices for long.”

The sub-indicator for current subcontractor labor costs experienced a further pullback in September, decreasing to 66.0 after a reading of 68.5 last month. Alongside declines registered in the U.S. Northeast, widespread decreases were seen in the U.S. Midwest, U.S. West and Western Canada regions, alongside no change in Eastern Canada and modest gains in the U.S. South.

The six-month headline expectations for future construction costs indicators increased modestly to 75.9 in September. The six-month expectations indicator for materials and equipment came in at 71.0, which is 5.3-points lower than last month’s figure. 10 of the 12 categories saw decreases in September, highlighted by an 18.3-point decrease from alloy steel pipe to 66.7 and a 14.4-point decrease from carbon steel pipe to 55.6. Providing the greatest source of upward pressure were a 9.8-point increase from redi-mix concrete to 78.6 and a 7.5-point increase from copper-based wire and cable to 87.5.

Meanwhile, the six-month expectations indicator for subcontractor labor saw supportive results in September with the only contraction being seen in the U.S. Northeast. Meanwhile, upward pressure was seen from the U.S. South, Midwest and West. Unchanged readings were recorded for both the Eastern and Western regions of Canada. On balance, despite weaker near-term readings, the overall sub-contractor labor outlook reading pushed higher to 87.3 in September.

Respondents reported few shortages this month, largely confined to copper products and electrical equipment categories. Market commentary continued to note general uncertainties related to tariff policy with some noting suppliers pre-emptively raising prices due to metal price gains.

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