Price growth of building materials in NCR picks up in July

THE WHOLESALE and retail price growth of construction materials in Metro Manila picked up in July as lockdowns eased, data released by the Philippine Statistics Authority (PSA) on Friday showed.

The construction materials wholesale price index (CMWPI) in the National Capital Region (NCR) grew 2.3% year on year in July, a tad faster than the 2.2% expansion in June and 1.8% in July 2020.

Similarly, growth in the construction materials retail price index (CMRPI) picked up to 1.4% in July from 1.2% the previous month and 1.1% last year. It was also fastest in eight months or since the 1.7% year-on-year expansion in November 2020 and matched December 2020’s 1.4%.

Wholesale prices reflect bulk purchases by building firms participating in major projects like infrastructure works. Retail prices reflect activity in smaller segments.

The acceleration in the CMWPI was driven by higher annual increments in the following materials: electrical works (4.1% in July from 3.9% in June); reinforcing and structural steel (3.6% from 2.1%); PVC pipes (3.5% from 1.0%); tileworks (2.8% from 2.4%); galvanized iron sheets (2.3% from 0.7%); hardware (2.2% from 2.0%); painting works (1.7% from 1.4%); plywood (1.9% from 1.2%); and doors, jambs, and steel casement (1.9% from 1.8%).

Plumbing fixtures and accessories/waterworks continued to decline, albeit at a slower pace at -0.9% from -1.0% in the previous month.

The annual drop in the index of plumbing fixtures and accessories/waterworks was lower in July at -0.9 percent from -1.0 percent in the previous month.

Slower price pickups were recorded in lumber (2.0% from 2.3%) and fuels and lubricants (18% from 21.2%).

Meanwhile, the price growth of glass and glass products was unchanged at 14.4%, while that for asphalt and machinery and equipment rental was flat.

At the retail level, the CMRPI was driven by faster increases in the following commodity groups: tinsmithry materials (2.2% from 1.8%), miscellaneous construction materials (1.6% from 1.5%), electrical materials (1.0% from 0.8%), and plumbing materials (0.8% from 0.6%).

On the other hand, masonry materials saw its price growth ease to 1.0% from 1.1% the month before.

The following commodity groups saw their respective price growth steady in July: carpentry materials (1.5%) and painting materials and related compounds (1.1%).

“The pickup in some construction activity parallels with easing lockdowns in July and may have pushed prices slightly higher, although base effects may have also contributed to the uptick even though it remains below pre-pandemic levels,” said Security Bank Corp. Chief Economist Robert Dan J. Roces in an e-mail.

Metro Manila and the surrounding areas were placed under general community quarantine from May 15 to Aug. 5, albeit with varying restrictions. This was elevated to a stricter enhanced community quarantine (ECQ) from Aug. 6 to 20 in order to curb the spread of the more infectious Delta coronavirus disease 2019 (COVID-19) variant, and later eased to modified ECQ.

Since Thursday, the government implemented a pilot program of localized lockdowns in Metro Manila. Under the new guidelines, lockdowns will be localized at city level depending on the case transmission rates and healthcare utilization rates. The new alert system will consist of five levels, with level 5 equivalent to ECQ.

“August’s construction activity may have been hampered by the return to ECQ that month, although we may see only a modest pullback in construction efforts with the imposition of a granular form of lockdown by September, while base effects may still lift prices in the months ahead when more projects resume,” Mr. Roces said.

“In addition, capital expansion via loan growth has been observed in the construction sector with January-July growth printing a decent 2.0% while employment growth for the same period was at 7%, so activity in the sector is expected to continue to contribute to upticks in the CWMPI,” he added. — Bernadette Therese M. Gadon