Amid the rainy season and floods, private construction projects declined in July, with drops in total project count, floor area, and value compared to a month ago and a year ago levels, according to the latest preliminary data from the Philippine Statistics Authority (PSA).

Private-sector economists expect this slowdown to linger for the rest of the third quarter, even as it would inflict only a small dent on overall economic growth.

The PSA last Friday, Sept. 19, reported an 8.5-percent year-on-year decrease in approved building permits, which serve as a proxy for private construction activities, in July. The total number of projects reached 15,395 that month, down from 16,821 in July 2024. This came after the sector posted a 14.9-percent annual growth rate in June, with 16,394 projects.

In terms of value, PSA data showed that private construction projects in July amounted to ₱44.54 billion, reflecting a 7.5-percent decline from ₱48.16 billion in the same period last year. In June, a bigger ₱58.89 billion worth of projects were granted with building permits.

As for floor area, the 3.47 million square meters (sqm) covered by building permits approved in July fell from 4.59 million sqm in June and 3.54 million sqm in July last year.

The data also showed that residential buildings topped the month with 10,157 projects, making up about two-thirds of the total. However, this reflected an 8.5-percent annual decline from 11,096 projects recorded in the same month last year. In June, a higher 11,201 residential projects were rolled out.

The report showed that single-type houses accounted for the majority of residential constructions, with 8,034 projects.

Non-residential constructions followed with 3,205 projects, representing around one-fifth of the month’s total. This category declined by 8.8 percent year-on-year.

The majority of non-residential constructions were commercial buildings, totaling 2,150 projects.

Despite the larger number of residential projects, PSA data revealed that new non-residential buildings recorded a slightly higher construction value of ₱19.84 billion, equivalent to 44.6 percent of the month’s total, along with a bigger floor area of 1.78 million sqm, or 51.2 percent of total.

Residential buildings, meanwhile, posted a construction value of ₱19.77 billion, or 44.4 percent of total, with a floor area of 1.63 million sqm, or 47 percent of total.

PSA data also showed that other construction activities in July included additions (₱577.98 million worth), alterations and repairs (₱3.26 billion), and other types of construction (₱1.09 billion).

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), told Manila Bulletin on Saturday, Sept. 20, that the decline in construction activity in July was largely due to weather-related disruptions.

It was “similar to the adverse effects on slower vehicle sales,” Ricafort added, noting that the series of typhoons and flooding could dampen construction activity and raise the possibility that the weakness may persist in the coming months.

For his part, John Paolo Rivera, senior research fellow at the state-run think tank Philippine Institute for Development Studies (PIDS), told Manila Bulletin that the figures highlight a pronounced slowdown in private construction, especially in residential projects.

Rivera attributed this partly to recent bad weather—such as monsoon rains and flooding in many regions—that hampered site access, caused delays in local government approvals, and damaged infrastructure.

“It is reasonable to expect that construction activity may remain weak for the rest of the third quarter as weather risks persist and some developers may postpone projects,” he added.

Rivera noted that the decline in permits could slightly weigh on third-quarter growth, particularly in construction-related sectors such as materials, real estate, and local employment.

He said, however, that it is unlikely to significantly derail overall gross domestic product (GDP) growth unless compounded by external shocks or tighter credit conditions.

(Ricardo M. Austria)