Friday 7th June 2019
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New Zealand's building activity hit a three-year high in the March quarter as non-residential building volume growth continued to push higher and as residential construction was also strong.
The volume of building work put in place increased a seasonally adjusted 6.2 percent in the three months ended March 31 after a 3.4 percent lift in the December quarter, Stats NZ said. It was the strongest growth since the March 2016 quarter when it rose 6.5 percent. The market had expected a lift of 1.1 percent according to the median in a Bloomberg poll.
“Growth in building activity this quarter was driven by non-residential construction, including work on social and cultural buildings, offices, and universities,” construction statistics manager Melissa McKenzie said.
According to ASB Bank senior economist Jane Turner, the "extent of the Q1 increase is remarkable given the degree of capacity constraints reportedly biting in this sector. The lift in activity was also fairly broad-based across New Zealand."
The strong data led ASB Bank to bump up its preliminary economic growth forecast for the first quarter and now expects the economy grew 0.6 percent on quarter in the first quarter versus its prior forecast 0.4 percent. It will finalise the forecast next week.
Despite the surprisingly strong data, the New Zealand dollar was virtually unmoved, trading at 66.20 US cents.
The volume of non-residential building activity rose 9 percent in the March 2019 quarter compared with the December 2018 quarter when it lifted 5.7 percent while residential construction volumes rose 4.3 percent versus a 1.9 percent lift in the December quarter.
“The volume of building work has been generally increasing since 2012, boosted originally by the Canterbury earthquake rebuild, and more recently by developments in Auckland,” McKenzie said.
Construction in Auckland led the rise in the volume of building work for this quarter.
The actual value rose 15.7 percent to $6.1 billion in the March quarter from the same quarter a year ago. Of that, non-residential work was up 22.4 percent at $2.2 billion and residential - including alterations and additions - rose 12.2 percent to $3.9 billion.
Today's figures show the annual value of new residential work of $12.7 billion was 7.9 percent higher than a year earlier, while alterations and additions were 7.8 percent higher at $2.5 billion.
Non-residential work totalled $8.4 billion in the 12 months to the end of March, of which $1.41 billion was spent on office, administration and public transport, and $1.4 billion on education.
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