The non-residential construction sector is at "the precipice of a collapse", the New Zealand Institute of Economic Research (NZIER) warns.Work usually lagged consents by a year, and a year ago the level of consented floor area fell by a third. T
The non-residential construction sector is at "the precipice of a collapse", the New Zealand Institute of Economic Research (NZIER) warns.
Work usually lagged consents by a year, and a year ago the level of consented floor area fell by a third. That alone may put around 20,000 construction sector jobs at risk, NZIER said today.
Publishing its September 2010 Quarterly Predictions today, NZIER said economic recovery was slowing, but it considered there to be sufficient momentum and stimulus in the economy to avoid a repeat recession.
"But the economy will be soft in the next six months. Households remain cautious with spending, net migration will slow further, and non-residential construction work is now running dry," NZIER principal economist Shamubeel Eaqub said.
NZIER warned that for retailers it would feel like a recession for some time.
"Retailers should plan for a disappointing pre-GST hike spend-up and Christmas shopping. Households remain cautious and are making do with less than before the recession.
"A slow recovery in jobs and wages, and debt repayment will dampen spending for some time. Impending food price increases and other one-off costs will offset the personal tax cuts for the lower half of income earners."
NZIER said it was less optimistic than other forecasters.
It expected economic growth of 2.2 percent in 2010 calendar year, slowing to 1.2 percent in 2011, before rebounding to 2.9 percent in 2012.
"This reflects a weak patch in late 2010 and early 2011. Our view reflects a cautious attitude from households and businesses, slowing net migration, and an impending slump in non-residential construction."
