Construction costs slow down in May under lower pressure from workforce

Section: Economic Statistics | Carmen Nery

June 10, 2020 09h00 AM | Last Updated: June 10, 2020 11h20 AM

Under lower pressure from workforce, construction costs decelerate - Photo: Helena Pontes/IBGE News Agency

The National Index of Civil Construction (Sinapi), released today (10) by the IBGE, rose 0.17% in May, but was 0.08 percentage points below the rate of April, which was 0.25%. This is the second lowest index for May (behind the 0.11% of May 2019) since the beginning of the time series in 2014. The result shows a deceleration in the monthly rate, in the cumulative index in the year and in the last 12 months. From January to May, the index accumulated 1.33%. In the last twelve months, the rate added up to 3.74%.

Traditionally, May used to be the month when collective agreements were ratified, but now they are spread out over the year and require much more negotiation. In May this year, only Maranhão had a collective agreement, up 1.57%, but it is a state with little weight in total. The workforce has a weight of 40% and, with the slowdown of construction, there is high pressure due to loss of workers' bargaining power compared to the heyday of infrastructure works," explains Sinapi manager Augusto Oliveira

The national cost of construction, per square meter, which closed at R$1,172.05 in April, increased to R$1,174.05 in May, of which R$615.56 were related to materials and R$558.46, to workforce.

In the month of May 2020, the cost of workforce changed very little (0.14%), registering a decrease of 0.28 pp in relation to the previous month (0.42%). In relation to May 2019 (- 0.21%), there was an increase of 0.35 pp

Materials up 0.19% in May

The survey manager explains that the increase in the general index was mainly affected by the cost of materials, especially in the states of Amapá, Roraima and Paraná. The share of materials changed by 0.19%, registering an increase of 0.10 percentage points in relation to the previous month (0.09%), while in relation to May 2019 (0.39%), there was a decrease of 0.20 percentage points.

“We saw highs in various materials in the Northern states, such as Amapá and Roraima, and in Paraná, in the South Region. The portion of materials is the most important in the final assessment of these states, where the cost of workforce has remained stable. In fact, the workforce has remained stable - with small drops or small increases - in all states, except Maranhão,” explains Mr. Oliveira.

Northeast has the highest construction index in May

Mr. Oliveira points out that the Northeast recorded the highest regional change in May (0.27%). The rate in the Northeast was affected by the increase observed in the professional categories in Maranhão. The other regions presented the following results: 0.16% (North), 0.11% (Southeast), 0.22% (South) and 0.03% (Central-West). The regional costs, per square meter, were: R$1,181.52 (North); R$1,089.44 (Northeast); R$1,222.84 (Southeast); R$1,230.98 (South) and R$1,176.20 (Central-West).

This is the second month of distance collection. But the manager says it is not yet possible to verify the impact of the pandemic on the sector's costs.

“We would need a longer series to actually determine that effect, two months is not enough yet. There are several ongoing construction works, not to mention other works that were started to fight against Covid-19. In May, the result is due to the reduction in the workforce side and the increase in material costs in three states”, states Mr. Oliveira.