Infrastructure spending declines by 28% in April

Spending on infrastructure slumped in April due to the election ban on disbursements for public works projects, the Department of Budget and Management (DBM) said.

In its latest disbursement report on Tuesday, the DBM reported that spending on infrastructure and other capital outlays declined by 27.8% to P85.8 billion in April from P118.9 billion in the same month last year.

“This was due mostly to the muted infrastructure spending of the Department of Public Works and Highways (DPWH), resulting from election-related prohibition on public spending for specific activities, goods, or services, as well as lower volume of contractor billings,” the DBM said.

Government agencies likely frontloaded and accelerated the implementation of infrastructure projects earlier this year, the DBM said.

The Commission on Elections implemented a 45-day ban on the release, disbursement or expenditures of public funds from March 28 to May 11.

The elections were held on May 12.

The DBM also attributed the decline in infrastructure spending to lower direct payments for foreign-assisted rail projects of the Department of Transportation, as well as the releases for local counterpart funds.

These rail projects include the South Commuter Railway Project and the Metro Manila Subway Project.

For the first four months of the year, infrastructure spending rose by 3.6% to P347.6 billion from P335.7 billion in the same period in 2024.

The DBM attributed the increase in infrastructure spending to the “robust spending performance of the DPWH for the implementation of various infrastructure projects, right-of-way settlements, and payment of progress billings (i.e., partially completed works) and accounts payables.”

Meanwhile, overall infrastructure disbursements inched up by 2.4% to P419.4 billion in the January-to-April period from P409.7 billion a year ago.

This includes infrastructure components of subsidy/equity to government corporations and transfers to local government units.

Analysts said infrastructure spending will likely pick up in the next few months.

“We may expect infrastructure spending to continue ramping up to boost the economy both through higher spending and employment in the construction sector, but also better economic activity comes with better infrastructure,” Oikonomia Advisory & Research, Inc. economist Reinielle Matt M. Erece said.

Budget Secretary Amenah F. Pangandaman earlier said infrastructure-related disbursements would likely increase after the election ban ended.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said government spending, particularly on infrastructure, would be a major contributor to overall economic growth.

“Infrastructure spending has been prioritized and increased in recent years to 5%-6% of GDP (gross domestic product), much higher vs. below 2% of GDP about 20-30 years ago,” he said in a Viber message.

For this year, the government’s infrastructure program is set at P1.538 trillion, equivalent to 5.4% of total output.

The Development Budget Coordination Committee earlier said infrastructure spending will be sustained at 5-6% of GDP annually.

Source: Business World

Bulk price growth of building materials in NCR eases in May, retail price growth steadies

Wholesale price growth of construction materials in Metro Manila eased further in May, its slowest in three months, while retail price growth steadied, the Philippine Statistics Authority (PSA) reported.

Based on preliminary data, the PSA showed that year-on-year growth of the construction materials wholesale price index (CMWPI) in the National capital region (NCR) cooled to 0.2% in May from 0.3% in April.

The May reading was significantly lower than the 0.6% growth posted in May 2024.

It was also the lowest year-on-year growth in three months, when February posted no annual growth.

Year to date, May CMWPI growth averaged 0.2%, significantly lower than the 0.9% growth a year earlier.

“The downtrend in the annual growth rate of the CMWPI was mainly caused by the slower annual increase of the concrete products index at 0.3% in May from 0.5% in the previous month,” the PSA said in the report.

Concrete products accounted for 45.7% of the index.

Slower growth was also recorded in tileworks: (2% in May from 3.6% in April), and electrical works (0.3% from 0.4%).

Meanwhile, the following commodities logged faster annual declines: fuels and lubricants (-4.7% form -4%), reinforcing steel (-0.9% from 0.6%), and cement (-1.5% from -1.4%).

On the other hand, stronger growth was recorded in the index of hardware (0.4% from 0.1%), doors, jambs, and steel casement (0.5% from 0.4%)., and PVC pipes (0.6% from 0%).

In a separate report by the PSA, the construction materials retail price index (CMRPI) steadied to 1% in May, from April and from a year earlier.

The May CMRPI outcome was the lowest in 14 months or since the 0.6% in March 2024.

In the five months to May, CMRPI in NCR averaged 1.1% from 1% in January-May 2024.

The CMRPI is based on 2012 constant prices, while the CMWPI is based on 2018 constant prices.

The PSA attributed the steady growth to slower annual increases in the following commodity groups: carpentry materials (0.1% in May from 0.4% in April), painting materials and related compounds (2.1% from 2.4%), plumbing materials (0.5% from 1.5%), and tinsmithry materials (1.3% from 1.5%).

Meanwhile, among the seven commodity groups in the CMRPI, masonry materials (1.1% from 0.6%) and miscellaneous construction materials (0.4% from 0.3%) posted faster annual growth.

Nicholas Antonio T. Mapa, senior economist at Metropolitan Bank & Trust Co., said that he expects modest growth increases in building material prices, which reflects robust but subdued demand for construction activity.

“A further reduction in borrowing costs could help spur a rise in demand for construction projects and activity in the coming months,” he said.

In its April policy meeting, the central bank slashed borrowing costs by 25 basis points (bps), resuming its easing cycle. So far, the central bank has reduced key rates by a total of 100 bps since it began its easing cycle in August 2024.

Source: Manila Times

Wholesale prices growth of building materials rise in April

Wholesale price growth of construction materials in the National Capital Region (NCR) rose in April, the Philippine Statistics Authority (PSA) reported on Friday.

The construction materials wholesale price index (CMWPI) in Metro Manila slightly picked up by 0.3% year on year in April, inching up from the 0.2% growth in March. However, this was lower than the 0.7% growth recorded in April 2024.

In the four months to April, Metro Manila’s CMWPI averaged 0.2%, slower than 1% growth during the same period.

The pace recorded in April was the fastest in nine months or since the 0.5% growth in July 2024.

Contributing to last month’s increase were faster growth in tileworks (3.6% from 1% in March), sand and gravel (0.4% from 0.3%), electrical works (0.4% from 0.3%), and painting works (1.1% from 1%).

The year-on-year growth in other commodities remained unchanged when compared with the previous month: plumbing fixtures & accessories/waterworks (0.9%) and doors, jambs, and steel casement (0.4%).

In a separate report by the PSA, the construction materials wholesale price index (CMWPI) in April eased to 1%, lower than 1.2% growth of March. It also cooled from 1.2% in April 2024.

Year to date, CMRPI averaged 1.1%, easing a bit from 1% growth in January-April 2024.

April print was the lowest in more than a year or since the 0.6% in March 2024The CMRPI is based on 2012 constant prices, while the CMWPI is based on 2018 constant prices.

The PSA attributed the slower annual CMWPI growth to prices in carpentry which slowed down by 0.4% in April from 0.7% in March and tinsmithry materials with 1.5% from 1.6%.

Commodity groups where rates steadied were painting materials and related compounds (2.4%), plumbing materials (0.7%) and miscellaneous construction materials (0.3%).

Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said that the modest construction growth could be influenced by several factors such as election ban and tariff risks.

“The ban on public works during the election period can lead to delays in construction projects and procurement of materials. This restriction, aimed at preventing the misuse of public funds for electioneering, often results in a temporary slowdown in construction activities. This can affect the demand for construction materials, contributing to the modest growth observed,” Mr. Ravelas said in a Viber message.

Mr. Ravelas added that tariffs on imported construction materials can increase costs and disrupt supply chains.

“These tariffs create uncertainty in the market, as companies may face higher expenses and delays in material delivery, impacting overall project timelines and budgets,” he said.

Source: Business World