Construction material prices in Metro Manila soar to 17-month high

WHOLESALE PRICES of construction materials in Metro Manila posted their fastest growth in 17 months in March, the Philippine Statistics Authority (PSA) reported on Wednesday.

These prices, as measured by the construction materials wholesale price index (CMWPI) in the National Capital Region (NCR), rose 2.2% year on year in March versus the growth rates of 2% and 1.6% in March 2020.

The March outcome was the highest reading in 17 months or since the 2.6% logged in October 2019. Wholesale prices reflect bulk buying by large construction firms engaged in major projects.

For the year, the index has grown by 1.8%, slightly up from the 1.7% posted in last year’s comparable three months.

In a text message, Asian Institute of Management (AIM) economist John Paolo R. Rivera attributed the record growth in wholesale construction prices in NCR to the resumption of most construction activities that month which drove up demand.

“This resulted in an upward pressure on [prices of construction materials] given the persistent economic uncertainties that may compel supply constraints,” Mr. Rivera said.

The year-on-year pickup in March was driven mainly by prices of fuel and lubricants, which rose 6.8%, compared with a month earlier when prices of these products declined by 0.3%. This was followed by sand and gravel (4% from 3.5% in February); hardware (1.9% from 1.5%); electrical works (1.5% from 0.4%); plywood (1.2% from 0.4%); doors, jambs, and steel casement (1.2% from 0.5%); painting works (0.9% from 0.3%); and galvanized iron sheets (0.5% from 0.4%).

Meanwhile, year-on-year price growth was unchanged for glass and glass products (14.4%); reinforcing and structural steel (3.3%); lumber (2.8%); tileworks (2.2%); concrete products and cement (1.2%); and PVC pipes (0.6%).

Wholesale prices for asphalt and machinery and equipment rental were flat in March.

Bucking the trend was plumbing fixtures and accessories/waterworks, which saw their prices decline faster at 2.2% from the previous month’s annual contraction of 1.3%.

Asked on how stricter restrictions would affect the construction index in coming months, AIM’s Mr. Rivera said it would depend on whether the lockdown has resulted in the worsening of “supply constraints” currently faced by construction firms.

“If quarantine restrictions will affect supply of construction materials because of difficulty of production/importation/sourcing, then the CMWPI is likely to increase because construction projects are ongoing,” Mr. Rivera said.

“However, in the absence of supply constraints (assuming raw materials sourced domestically and internationally are available on time), there is less pressure for the CMWPI to increase…,” he added.

Metro Manila and the provinces of Bulacan, Cavite, Laguna, and Rizal were placed under enhanced community quarantine (ECQ) — the country’s strictest form of lockdown — from March 29 to April 11. The areas are now under a modified ECQ (MECQ) until April 30, allowing some construction firms to operate to at least 50% on-site capacity.

Earlier this month, Department of Public Works and Highways Secretary Mark A. Villar issued Department Order No. 30. This allows “all essential public and private construction projects” except “small-scale projects” in areas under ECQ and MECQ to operate at full operational capacity.

A look at the PSA’s national accounts shows that among subsectors, construction was the biggest contributor to the decline in the country’s gross domestic product in 2020. Of the 9.6% contraction last year, the sector contributed two percentage points. — Jobo E. Hernandez