Monday 8th December 2008
|Text too small?|
Residential building fell 7.9% in the latest quarter while commercial construction gained 5.8%, according to Statistics New Zealand. Total construction work, adjusted for inflation, fell 2.1% from the second quarter.
The weakening home building figures underpin Reserve Bank Governor Alan Bollard's decision to cut the official cash rate by a record 150 basis points this month. While short-term mortgage rates are declining, the recession is likely to push more people out of work and sap demand fro property.
"As volume of work declines we expect increased layoffs" in the building sector, said Shamubeel Eaqub, economist at Goldman Sachs JBWere. "We estimate the sector
to be overstaffed by about 35,000 persons, which combined with further reductions in work done could result in significant job losses."
New Zealand's unemployment rate rose to a five-year high in the third quarter as the weakening economy trimmed demand for workers, according to government figures this month. The jobless rate rose to 4.2%, seasonally adjusted, from 3.9% in the second quarter.
When cutting the OCR last week, Bollard forecast the economy contracted 0.3% in the third quarter, extenmding the first recession since 1998.
Quotable Value today said New Zealand house prices fell 6.8% in November from a year earlier.
No comments yet
28th October 2021 Morning Report
Wellington Drive Technologies Limited (NZX: WDT) Performs Strongly in Q3-2021
Ryman Healthcare Limited (NZX: RYM) Acquires Extensions to Two Existing Victorian Sites
Promisia Healthcare Limited (NZX: PHL) Banking Covenant Update
Pictor Limited Announces Start of US Clinical Trials for SARS-CoV-2 Serology Test
Arvida Group Limited (NZX: ARV) Opening of Rights Offer
Move Logistics Group Limited (NZX: MOV) Announces $40m Capital Raise
27th October 2021 Morning Report
The a2 Milk Company Limited (NZX: ATM) Investor Day 2021
Contact Energy Limited (NZX: CEN) Considers Green Capital Bond Offer