Value of NZ residential building work inches higher in March

The value of New Zealand residential building work inched higher in the March quarter but total building values fell, weighed by a sharp fall in non-residential construction.

The seasonally adjusted value of residential building work gained 0.1 percent in the three months ended March 31, after a 2.3 percent rise in the fourth quarter of 2016, Statistics New Zealand said. Still, residential building work volumes fell a seasonally adjusted 0.8 percent in the latest three-month period, turning around a 0.7 percent rise in the fourth quarter.

Total building volumes fell 3.5 percent, seasonally adjusted, in the first quarter, while the value fell 2.2 percent. The total was weighed by a 6.4 percent slide in non-residential building values and a 7.2 percent drop in non-residential building volumes.

"Building activity adjusted for price changes fell for the first time in two years, due to a decrease in commercial and other non-residential building work this quarter," said Jason Attewell, Stats NZ senior manager.

Capacity constraints are continuing to bite as skilled labour remains in high demand. Firms continued to struggle to find labour in the March quarter, with a net 41 percent finding it hard to find skilled workers and a net 24 percent struggling with unskilled staff, compared to 36 percent for skilled hires and 24 percent for unskilled in December, according to the latest New Zealand Institute of Economic Research's quarterly survey of business opinion.

According to Stats NZ, the volume trend for all building work has declined, but is still 68 percent higher than a low point in the September 2011 quarter. It also said the value of building consents rose 6.6 percent in the March 2017 quarter compared with the December 2016 quarter - made up of a 0.2 percent rise for residential buildings, and a 20 percent rise for non-residential buildings. "Building consents are an indicator of future building activity, and almost all consented work is eventually completed," Stats NZ said.

Kiwibank chief economist Zoe Wallis said rising building costs and tighter financial conditions slowed the pace of construction growth and will likely persist until at least the September general election.

"We expected the pullback in residential building WPIP (work put in place) given the softer consents data we have been seeing," Wallis said in a note. "The tailing-off of work in Canterbury continues to place on drag on headline numbers, with non-residential work in Christchurch having declined in the last couple of quarters."

The actual value of all building work was $4.94 billion, up 10.9 percent on the year. Of that, the value of residential building work was $3.3 billion, up 14.3 percent on the year while the actual value of non-residential building work was $1.7 billion, up 5.1 percent on the year.

The value of building work in Auckland was $1.8 billion, up 12.5 percent from the same quarter in 2015. It was $1.0 billion in Canterbury, down 4.7 percent on the year.

(BusinessDesk)