The Prime Building Costs Index (PBCI) has expanded year-on-year by 9%, pointing to an increasing trajectory of the costs of building materials in the construction industry of Ghana.
Computed by the Ghana Statistical Service (GSS) quarterly, the PBCI measures the month-to-month changes in the prices of building materials for the construction industry.
The overall index rose from 4774.3 in June 2019 to 5207.8 in June 2020. However, in the first half of this year, the overall PBCI rose from 5119.8 in January to 5207.8 in June, an increase of 1.7% in the cost of building materials over the six months.
The PBCI captures labor costs which comprise both skilled and unskilled labor, as well as non-labor costs and cost of materials. The costs of materials include costs of cement, sand, roofing materials, steel materials, stones, timber, and other miscellaneous expenditures.
Labour constitute an indispensable resource in the construction industry. Without labor, it will be practically impossible for any construction activity to be undertaken as the machines and other equipment used in this industry require highly skilled labor to operate. Similarly, the work of unskilled labor cannot be underestimated in this industry. Labor costs, therefore, accounted for a larger proportion of the total costs of the construction industry.
The available data shows that the index for labor costs rose from 6895.8 in June 2019 to 8081.4 in the corresponding month of 2020. The above implies that the cost of labor which includes wages and salaries went up by 17.2% in the construction industry over the past year.
Also, labor costs rose by 5.3% between January and June this year compared to the same period last year where labor costs remained unchanged.
Whereas both skilled and unskilled labor costs went up in the review period, the former experienced a higher rise than the latter. Skilled labor costs increased by 20.5%, shown by the increment of the price index of skilled labor from 6150.2 in June 2019 to 7410.4 in June 2020. On the other hand, the costs for unskilled labor went up by 13.4 % as the index for this category of workers rose from 8414.3 in June 2019 to 9545.2 in June 2020
Cement also plays an indispensable role in the construction industry. The cost of cement rose by 9.9 % over the past one year under review, as shown by an increase in the index from 2699.0 in June 2019 to 2966.3 in June 2020. However, with an index of 2725.1 in January 2020, the cost of cement rose by 8.9% in the first half of the year.
With regards to roofing materials, the index rose from 9247.3 in June 2019 to 9272.1 in June 2020. This implies that prices of roofing materials went up marginally by 0.3 % over the review one-year period. The index remains constant for the first six months of the year, which shows that prices of roofing materials remain largely unchanged.
Furthermore, the cost of sand increased by 1.7 % as the index rose from 1397.2 in June 2019 to 1420.3 in June 2020.
The cost of steel materials went up by 9.2 %, with the index increasing from 5097.0 in June 2019 to 5565.6 in June 2020. The cost of steel however remained stable in the first six months of the year as the index remained unchanged.
The index for the Cost of stones increased from 1919.6 in June 2019 to 1965.1 in June 2020, a year-on-year rise of 2.4% whilst the cost of timber went up by 6.7 % over the review period.
Despite the increasing costs of materials in the construction sector, Data from the Bank of Ghana shows that the construction sector of Ghana has seen a huge expansion at the beginning of the third quarter of the year.
The sector’s activities in the construction sub-sector, measured by the volume of cement sales increased to 351,608.35 tonnes in July 2020 compared with 248,808.74 tonnes recorded a year ago. The expansion represents a year-on-year growth of 41.3 percent.
Akin to the increasing costs of cement, data from the Bank of Ghana shows that total cement sales picked up marginally by 3.4 percent in July 2020 compared with the 340,116.45 tonnes recorded in June.
