Ongoing weakness is expected to continue in the construction sector for most of 2012, reflecting last November's decline in residential dwelling consents which were at "very subdued levels", led by a South Island downturn.
Compared with November 2010, Statistics New Zealand data released yesterday said total residential consent values last November fell $9 million, or 1.8%, while total commercial values fell $65 million, or 13%.
ASB economist Jane Turner said residential dwelling consent issuance "remains very subdued and points to ongoing weakness in construction activity in early 2012".
This year, she expected underlying demand for housing construction to pick up, reflecting the current tightness in the housing market, particularly in Auckland.
"Overall, the November building consent issuance points to continued weakness in the near-term construction outlook and highlights there is little need for the Reserve Bank to lift the official cash rate before December," Ms Turner said in a statement.
In the South Island, residential dwelling consents were down 18% for November, by 92 to to 419; mainly due to decreases in Canterbury and Otago, while in the North Island they were almost unchanged at 960, with sizeable Auckland increases nullified by declines elsewhere, particularly in Wellington.
Ms Turner said from mid-2012, earthquake reconstruction is likely to get under way and lift construction activity from current lows to levels which prevailed over 2003-2008.
"However, there remain many uncertainties around the [Christchurch] reconstruction process and risks are skewed towards a later start," she said.
In recent months, Canterbury consent issuance had started to lift off lows but still remained below pre-quake levels and it was too early to see a "meaningful" pick-up in earthquake reconstruction activity, she said.
For November, earthquake-related consents in Canterbury totalled $47 million; $35 million for commercial, $7 million for residential and $5 million for other, non-building, construction.
Consent values
• Consent values for November 2011, compared with a year ago
• Total: $919 million, down $74 million
• Residential: $504 million, down $9 million.
• Commercial: $415 million, down $65 million.
