The data released by Statistics New Zealand yesterday appears to point towards continued weakness in both residential and commercial activity for the year ahead, including aspects of the rebuilding of Christchurch.
ASB economist Jane Turner said building activity was weaker than expected, falling 2.3% during the quarter compared with expectations of a small increase for the period.
"Weaker non-residential [commercial] construction activity led the decline, while residential activity remained flat at the lowest level since June 1993," she said in a statement yesterday.
Construction activity remained "very weak" during the third quarter and prompted ASB to lower its gross domestic product (GDP) forecast.
"Our preliminary forecast for for third-quarter GDP growth is now just 0.4%, and we will complete our forecast following the release of the manufacturing survey, on Thursday," Ms Turner said.
The data released by Statistics New Zealand yesterday said that overall the building activity in Christchurch, as with the rest of New Zealand, appeared to have fallen. In recent months, the rebuild of quake-hit Christchurch has been pushed further and further out by sector analysts toward later next year.
Industry and labour statistics manager Louise Holmes-Oliver noted residential Christchurch work had fallen, compared with a small increase nationally, and conversely, commercial Canterbury work increased while elsewhere around the country it declined. Nationally, all building work for the quarter was worth $1.02 billion, down 6.5%, with residential down 13% at $5.49 billion while non-residential was up 2.2% at $4.70 billion.
Ms Turner said non-residential building activity increased in Christchurch and was likely to be reflecting repair work following the spate of earthquakes.
The decline of non-residential building throughout the rest of the country reflected the ongoing impact of weak economic demand, with businesses scaling back investment in new buildings.
"While investment intentions have started to improve, the lead times with commercial construction projects suggest a meaningful pick-up in non-residential building may be some time away," she said.
In addition, non-residential consent issuance remains at subdued levels, and suggests commercial investment, outside of earthquake rebuilding, was likely to be "very quiet over the coming year".
Ms Turner expected that from mid-2012 earthquake reconstruction activity would start to pick up, and would be the primary driver of recovery in construction.
During 2012 she expected to see further improvement in underlying demand for construction.
"The housing supply remains tight, particularly in Auckland. As a result, the prospect of an increase in house prices along with an extended period of low interest rates should increase the incentives for building," Ms Turner said.
