NZ: Building work put in place down 1.5% in June quarter – Westpac

Satish Ranchhod, senior economist at Westpac, notes that New Zealand’s total construction  activity fell by 1.5% in the June quarter and was lower than Westpac’s forecast for a 0.9% rise or the average analyst forecast for a 1.3% increase.

Key Quotes

“The fall in building activity mainly related to  non-residential building  activity which was down 3.4% over the quarter. Those declines were centred on Auckland. Work on non-residential projects can be lumpy on a quarter-to-quarter basis. The June quarter fall followed very large gains in the past two quarters, and we had been expecting at least some decline.”

“Residential construction  was essentially flat in the June quarter. While we did see continued gains in Auckland and Canterbury, activity in other regions was down.”

“While today’s building work report was weaker than expected, other recent data has been firm (including the June quarter retail volumes report). On balance, we continue to expect a 0.5% gain in GDP for the June quarter.”

“Looking at the longer-term outlook, construction activity is set to remain strong over 2019, supported by strength in residential, commercial and infrastructure work. We expect a further step higher in 2020.”