Wholesale prices of building materials down in June

MANILA, Philippines — Wholesale prices of building materials in Metro Manila continued to ease in June, reflecting weak demand in the construction sector as most activities remain limited due to the community quarantine.

Based on the Construction Materials Wholesale Price Index (CMWPI) in the National Capital Region (NCR) – which is used as a reference in the costing of government projects – prices grew at a slower pace of 1.2 percent in June from 1.3 percent in May and 3.2 percent in June 2019.

This brought the year-to-date average to 1.5 percent.

A downward trend in the index had been seen since April, just weeks after government imposed a Luzon-wide enhanced community quarantine (ECQ).

“Construction material prices in Metro Manila in June remained relatively soft at 1.2 percent year-on-year as this may still reflect the slowdown in construction activities right after the height/peak of the lockdowns, especially from mid-March to May when Luzon was on ECQ until it was eased to MECQ in the final two weeks of May and further relaxed to GCQ starting June to July,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

“Construction declined by 33.5 percent year-on-year in the second quarter, largely reflecting the adverse effects of the COVID-19 lockdowns/pandemic, thereby fundamentally leading to less demand and slowdown in the prices/inflation on construction materials.”

Slower growth was registered in the indexes of plywood, plumbing and fixtures, accessories/waterworks and fuels and lubricants.

Price easing were also reflected in the indexes of hardware, galvanized iron sheets, tileworks, doors, jambs, steel casement, electrical works and PVC pipes.

Meanwhile minimal gains were recorded in the indexes of the following commodity groups during the month: concrete products and cement; lumber; reinforcing and structural steel; and painting works.

The indexes of the rest of the commodity groups maintained their previous month’s annual rates.

Ricafort said the emergence from the strict lockdown this month could lead to a pick up in construction activity, boosting prices of materials.

“Malacañang already signalled that easing of the MECQ on Metro Manila and other nearby areas after Aug. 18, could again lead to further pickup in business/economic activities, as well as in the construction industry in the coming months, thereby could lead to some gradual pickup in construction prices especially if recovery prospects gain traction, including the government’s priority to further boost infrastructure spending as part of the economic recovery program in the coming months/years beyond COVID-19,” he said.

“Record low interest rates would also support further pickup in construction activities, as well as some pickup in the prices of construction materials.”

The 2012-based CMWPI covers 17 commodity groups comprising around 100 building materials.

The CMWPI market basket includes selected construction materials identified from the bills of materials provided by the Department of Public Works and Highways, National Housing Authority and Subdivision and Housing Developers Association.