ANZ analysts point out that for the NZ economy, the volume of building work put in place rose 0.4% q/q in Q3, and annual growth softened to 7.7% over the past year.
Key Quotes
“Q3’s slight rise was below our expectation for a 2.2% lift and market expectations for a 1.0% q/q increase. Nominal activity rose 1.5% q/q (+11.6% y/y). By region, stronger building activity outside of the main cities more than offset a pullback in Wellington. The value of building activity was close to flat in Auckland and Canterbury in the quarter.”
“The increase in volumes was driven by a lift in non-residential work, which was up 2.4% q/q, bouncing back from a 3.3% decline last quarter. This was a bit above our expectations for a 1.4% rise. Non-residential building activity can be lumpy, but has risen a solid 12.5% over the past year.”
“Residential work was again softer than expected, falling 1.1% q/q, the second quarterly fall following a strong March quarter. This was weaker than the 2.7% rise we had expected, and annual growth slowed further to 4.5%.”
“The level of construction activity is high, but upside to growth appears limited given weak residential construction intentions and capacity constraints in the industry.”
“This print suggests a touch of downside risk around our provisional Q3 GDP estimate of 0.4% q/q, but stronger retail sales in Q3 provides an offset. There’s still a bit of data to come before we finalise our Q3 GDP pick.”
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