APPROVED constructing permits continued to say no by record double digits in January, the Philippine Statistics Authority (PSA) reported.
The PSA, citing preliminary data, said constructing projects covered by the permits numbered 12,526 in January, contracting by 14.6% from 14,665 a yr earlier.
This was the second straight month that construction starts fell. January’s decline was steeper than the revised 5% year-on yr drop logged in December last yr.
It was the most important decline so far because the PSA began tracking the indicator on a monthly basis in January 2024. Previously, approved constructing permits data were released on a quarterly basis.
Constructing projects in January covered a floor area of three.72 million square meters (sq.m), up 29.5% from a yr earlier.
Construction projects represented by the permits were valued at P48.58 billion in January, 26.1% higher from P38.52 billion a yr earlier.
Reinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc. said that the decline in construction activity may be an indicator of a “waiting” behavior from developers as they expect rate cuts this yr, which may help them save costs in financing these projects.
“I expect this behavior to vary this yr as rate cuts are seen underway and the value of construction materials has stabilized,” he said in an e-mail.
Last yr, the Bangko Sentral ng Pilipinas (BSP) slashed benchmark rates by a complete of 75 basis points (bps) since its easing cycle in August, bringing policy rate at 5.75%.
Nevertheless, in February during its first policy meeting this yr, the BSP kept its policy settings, surprising market expectations and at the identical time signaled fewer rate cuts this yr.
BSP Governor Eli M. Remolona told Bloomberg in a televised interview last March 19 that the central bank could still cut rates next month as much as 75 bps if economic output weakens.
Headline inflation rose 2.9% in January, regular as December.
In February, inflation slowed to 2.1%, bringing the common inflation rate in the primary two months to 2.5%, throughout the central bank’s 2-4% goal.
Moreover, retail price growth within the National Capital Region (NCR) eased to 1.2% in January, its weakest pace in five months.
Construction materials retail price index (CMRPI) in January was slower than the 1.5% in December and 1.4% recorded in January 2024.
However, construction materials wholesale price index (CMWPI) also slowed to a record 0.1% that month, lower than the 0.2% in December and 1.5% a yr earlier.
The CMRPI relies on 2012 constant prices, while the CMWPI relies on 2018 constant prices.
The PSA noted that residential had the best variety of constructions at 7,671 or 61.2% of the full variety of constructions throughout the month.
Nevertheless, this segment dropped 14.1% yr on yr. Residential projects were valued at P20.94 billion higher than the P16.35 billion in January 2024.
Single homes accounted for 89.5% of the residential category with approved permits contracting by 11.3% to six,863.
Permits for apartment buildings fell by 35% to 708, while permits for duplex or quadruplex homes also went down by 13% to 80.
Nonresidential projects, however, slipped 4.3% to three,138 from 3,278 from January 2024.
These projects accounted 25.1% of the full and were valued at P24.16 billion, 40.4% higher from a yr ago.
Approved industrial constructions which made up 72.9% of the nonresidential category dipped by 3.1% to 2,288 from 2,362 in January 2024.
Institutional permits were also down by 0.6% to 480 while industrial permits fell 13.1% to 193.
Meanwhile, approved agricultural projects went down by 7.6% to 109 from 118 a yr earlier. Other nonresidential projects contracted by 26.9 to 68 yr on yr.
Alteration and repair permits fell by 17% to 977 and were valued at P2.49 billion.
However, approved permits for additions, construction that increases the peak or area of an existing constructing, surged 24.8% to 463 from 371 in January 2024.
Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had essentially the most approved constructing projects, accounting for 26.2% of the full, with 3,279 construction projects, followed by the Central Luzon (1,314 permits) and Ilocos Region (1,135 permits).
The PSA said construction statistics are compiled from the copies of original application types of approved constructing permits in addition to from demolition and fencing permits collected monthly by the agency’s field personnel from the offices of local constructing officials nationwide. — J.P.G. Villanueva
