The sharp drop in approved building permits to a six-year low in August could pose another headwind to the country’s already fragile economic recovery, economists said.
Data from the Philippine Statistics Authority’s (PSA) Construction Statistics from Approved Building Permits showed that 10,968 construction activities were approved in August 2026, down 31 percent from 15,888 in the same month last year.
National Statistician Claire Dennis S. Mapa also confirmed to the BusinessMirror that the latest figure was the lowest since May 2020, when approved construction activity plunged to 4,725 amid the Covid-19 pandemic.
Philippine Institute for Development Studies (PIDS) Senior Research Fellow John Paolo R. Rivera said the decline could signal weaker construction demand as the industry grapples with elevated costs, financing constraints, and cautious investor sentiment.
‘A sustained decline in building permits could dampen economic growth, investment, and employment, given the sector’s strong linkages with other industries,’ Rivera said.
‘Fewer permits today may mean fewer projects and jobs in the coming months,’ he told the BusinessMirror.
Ateneo de Manila University economist Ser Percival Peña-Reyes also warned that a sustained drop could point to a weaker construction investment environment, lower demand for building materials and labor, and softer business and investor confidence.
More broadly, this could signal slower economic growth, weaker business and investor confidence, and fewer employment opportunities, although other economic indicators would be needed to confirm a wider slowdown, Peña-Reyes told the BusinessMirror.
However, Peña-Reyes cautioned that the sharp decline could partly reflect seasonal factors, including weather conditions that disrupted working days in August.
The Chinese Ghost Month may also have prompted some Chinese businessmen in the construction industry to temper their spending, he added.
The economists’ concerns come as the Philippines’ economic recovery remains sluggish, with gross domestic product (GDP) growth slowing to 3.2 percent in the second quarter of 2026, its weakest quarterly expansion in five years.
Official data showed that gross fixed capital formation, which measures investment spending on fixed assets by the public and private sectors, contracted by 13.7 percent in the second quarter, extending its three-quarter decline.
Construction investment further slumped by 14.8 percent in the second quarter, worse than the -4.35 percent recorded in the first quarter and -9.2 percent in the fourth quarter of 2025.
Based on PSA data, residential buildings accounted for the largest share of approved construction activities in August, at 6,355 or 57.9 percent of the total. However, this was down 40.7 percent from 10,712 in the same month last year.
The floor area of residential construction projects fell by 32.1 percent to 1.21 million square meters, while their estimated value declined by 23.7 percent to P16.86 billion.
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Non-residential buildings, meanwhile, accounted for 2,921 approved construction activities, down 6.2 percent from a year earlier.
Their combined floor area contracted by 50.3 percent to 1.30 million square meters, while their estimated construction value fell by 35.2 percent to P193.5 billion.
Meanwhile, additions to existing buildings accounted for 407 approved construction activities in August, down 12.8 percent, with their estimated value falling 24.8 percent to P466.73 million.
Alterations and repairs recorded 837 approved activities, down 28.2 percent, while their estimated value plunged 50.5 percent to P2.02 billion. Other construction activities, which include demolition, street furniture, landscaping and signboards, rose 4.2 percent to 448, although their estimated value dropped 93 percent to P524.27 million.
Despite the decline in approved building permits and total floor area, the average construction cost for new buildings, excluding additions, alterations and repairs, rose by 21.9 percent to P14,357.01 per square meter in August, from P11,778.22 in the same month last year, according to the PSA.
The PSA said the construction statistics derived from approved building permits provide an indication of the level of building activity nationwide.