Construction costs rise globally due to material and labor pressures

Construction industry stakeholders in the United States and Malaysia are reporting significant upward pressure on costs due to rising material, fuel, and labor expenses.

In the United States, construction input prices rose 1.2% in August 2026 compared to the previous month. Data from the U.S. Bureau of Labor Statistics indicates that prices for iron, steel, softwood lumber, copper wire, and cable have increased by more than 10% year-over-year. Specifically, steel mill product prices have risen 23.4% over the last 12 months, with prices since February 2020 having more than doubled. Economists warn that this ongoing escalation may impact contractor profitability in the coming months.

In Malaysia, the Master Builders Association Malaysia (MBAM) has warned that rising costs for fuel, transport, bitumen, and copper, alongside increased labor expenses, are squeezing contractor margins. These pressures include the implementation of a RM1,700 minimum wage and mandatory EPF contributions for foreign workers. MBAM is calling for a broader Variation of Price (VOP) mechanism in the 2027 Budget to help contractors manage unexpected cost increases, particularly those tied to fixed-price contracts, noting that these costs could eventually be passed on to homebuyers.