Caterpillar’s first-quarter sales climbed on strong demand for construction equipment despite supply chain challenges that continue to plague businesses ranging from car and phone makers to grocery stores.

And the Deerfield, Illinois, manufacturer is not immune to surging inflation that has run up costs for both consumer and companies across the globe.

Costs and expenses jumped 13% from last year to $11.73 billion. The company said rising manufacturing expenses primarily reflected more expensive material and freight costs. The company’s operating profit margin was 13.7% for the first quarter of 2022, compared with 15.3% for the first quarter of 2021.

The company also noted slowing sales in China due to COVID-19 and weakening residential construction.

Shares of Caterpillar Inc. slid 5% Thursday.

Overall sales rose 14% to $13.59 billion, topping the $13.5 billion that analysts surveyed by Zacks Investment Research were looking for. Higher prices also fueled revenue numbers.

Construction industry sales increased 12%, propelled by increased prices, changes in dealer inventories and higher end-user demand for aftermarket parts.

Sales in the resource industries division jumped 30% on higher sales volume and higher prices. The sales volume was impacted by better demand for equipment and aftermarket parts and changes in dealer inventories.

Housing demand has been on fire during the pandemic as millions of people relocated or buy a first home, but rising mortgage rates may start to dampen that. A run-up in rates is setting the stage for a slowdown in home sales this year as increased borrowing costs reduce would-be buyers’ purchasing power.

Also in China, Beijing has tightened controls on debt to stabilize its construction sector, and some of those maneuvers may have played out in Caterpillar’s performance there.

“In the first quarter of 2022, China was lower than we expected due to weaker residential construction and COVID-19-related shutdowns,” said CEO James Umpleby. “Overall, sales in China were about half the level we saw in the prior year’s quarter.”

Caterpillar Inc. earned $1.54 billion, or $2.86 per share, for the three months ended March 31.

Stripping out certain items, earnings were $2.88 per share. Wall Street expected $2.66 per share.