Building work climbs in June quarter, swelled by non-residential activity

New Zealand construction activity expanded for a second quarter, swelled by non-residential work as the focus of the Canterbury rebuild shifts to commercial buildings.

The volume of building work across all buildings rose a seasonally adjusted 1.6% in the three months ended June 30, from a 1.8% pace of expansion in the March quarter, according to Statistics NZ. Of that, non-residential work grew 5.2%, accounting for about 44% of activity in the period, while residential work shrank 1%.

On a value basis, all building work rose 2.2% in the quarter, with a 5.9% gain in non-residential work and a 0.1% increase in residential activity.

"The value of both residential and non-residential building work increased overall," business indicators manager Neil Kelly said in a statement. "In Auckland, residential work grew, while in Canterbury most of the growth was in non-residential work."

Building activity is forecast to remain robust over the next six years, with $209.4 billion of work projected over that period, peaking in 2016 at $36.5 billion of work. The bulk of that is associated with house building in Auckland, where builders are under pressure to erect properties to meet unsatisfied demand in the country's biggest city.

The August ANZ Business Outlook published this week showed a net 12% of respondents in the construction sector see increased investment in residential building over the coming year, while a net 9.4% see a contraction in commercial activity.

Today's data show Auckland residential work rose a seasonally adjusted 4.8% in the three months through June, its eighth quarterly expansion, while house building shrank 4.3% in Canterbury. In non-residential work, Auckland activity shrank 3.3%, its third quarterly contraction, while Canterbury work grew 18%, the biggest expansion since September 2013.

On an unadjusted basis, the value of all building work rose 7.9% in the June quarter to $4.06 billion from the same period a year earlier, for an annual increase of 15% to $15.96 billion.

Residential building work rose 7.3% to $2.5 billion in the quarter from June 2014, with new dwellings were up 9.3% to $2.03 billion, while non-residential work expanded 8.8% to $1.56 billion.

(BusinessDesk)