NZ: Total construction activity rose by 0.4% – Westpac

Satish Ranchhod, senior economist at Westpac, notes that New Zealand’s total construction activity rose by 0.4% in the June quarter, below Westpac’s and market forecasts.

Key Quotes

“Underlying the soft headline result was a fall in residential construction centred on Auckland. That’s likely to be a temporary pause with forward indicators still firm. Non-residential construction rebounded as expected.”

“Total construction activity rose by 0.4% in the September quarter. That was lower than our forecast for a 2.5% rise or the average analyst forecast for a 1% increase.”

“The main reason for the soft September quarter result was a 1.1% decline in residential building activity. That decline was centred on Auckland (where nominal spending on construction was down 3.6%) and Canterbury (down 2.5%). Spending in other parts of the country actually rose by 3.6%.”

“The trend in residential building activity has flattened off in recent years. However, we expect to see continued increases over 2020.”

“In contrast, non-residential construction rebounded as expected in September, rising by 2.4%. That was underpinned by strong activity in Auckland, with gains also seen in other areas.”

“Looking ahead, we expect to see continued strength in construction activity over 2020 and 2021.”