NCR records pickup in wholesale price growth of building materials

GROWTH in the wholesale price of construction materials in Metro Manila hit a 16-month high in February to 2% year on year, according to the Philippine Statistics Authority.

Wholesale construction materials prices in the National Capital Region (NCR), as reflected in the construction materials wholesale price index (CMWPI), rose 2% year on year in February, accelerating from 1.2% in January. the year-earlier growth rate was 1.5%.

The February outcome was the highest reading since the 2.6% logged in October 2019. Wholesale prices reflect bulk buying by large construction firms engaged in major projects.

“The pickup in some construction activity after several months of lockdown may have nudged prices slightly higher but base effects may have also contributed to the uptick for prices of this sector,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

Construction prices slowed in 2020 as demand eased due to shut down in economic activity to limit the spread of the coronavirus disease 2019 (COVID-19). Last year, the CMWPI grew by an average of 1.2%, well below the 3% average in 2019.

The pickup in February was driven mainly by glass and glass products, which rose 14.4%, compared with a month earlier, when prices in the category were unchanged. This was followed by reinforcing and structural steel (3.3% from 1.7%); concrete products and cement (1.2% from 0.8%); doors, jambs, and steel casements (0.5% from 0.2%); and hardware (1.5% from 1.4%).

The wholesale price of electrical works rebounded to 0.4% growth in February from a 0.01% decline in January.

Construction materials that posted slower price growth compared with January were: sand and gravel (3.5% from 3.6%), lumber (2.8% from 3.6%), tileworks (2.2% from 2.6%), PVC pipes (0.6% from 1.3%), and painting works (0.3% from 0.4%).

Year-on-year price growth was unchanged for galvanized iron sheets (0.4%), plywood (0.4%), machinery and equipment rental (0%), and asphalt (0%).

“Although construction activity may be hampered by the return to stricter mobility curbs, authorities have indicated that economic activity outside certain services will continue. Thus, we may see only a modest pullback in construction efforts while the base effects may still lift prices to show some extent on a year-on-year basis,” ING Bank’s Mr. Mapa said.

Following a surge in COVID-19 cases, the government ordered new restrictions within the so-called “NCR Plus” bubble between March 22 and April 4. The orders ban non-essential travel to and from the bubble, while closing or lowering the operating capacity of selected establishments.

“Construction and the real estate sectors have been one of the most impacted by the ongoing pandemic and the stark correction in prices and concurrent drop-off in demand for both commercial and residential developments will likely keep prices subdued in the near term,” Mr. Mapa added. — Marissa Mae M. Ramos