By Paul McBeth
New Zealand building activity picked up in the final three months of 2011 as construction in Canterbury began to emerge, with the region’s rebuild looming as a major economic stimulus.
The value of building work put in place rose a seasonally adjusted 2.9 percent to $1.7 billion in the three months ended Dec. 31, bouncing back from a decade-low in the previous quarter, according to Statistics New Zealand. Residential work climbed 4.4 percent and non-residential activity was up 1.4 percent.
“In Canterbury, there appeared to be a greater increase in building activity than in the rest of New Zealand,” industry and labour statistics manager Blair Cardno said in a statement. “This was true for both residential and non-residential building.”
The bill for the Canterbury rebuild is estimated to run beyond $20 billion, and is seen as the likely foundation for New Zealand’s economic recovery.
Still, ongoing seismic activity in the region has delayed work as insurers remain nervous about covering new work, deferring activity and sapping earnings for construction companies, such as Fletcher Building.
Today’s figures come after January building consents showed an improvement in intentions, mainly off the back of permits to build retirement units in Canterbury.
On an annual basis, the value of all building work put in place dropped 10 percent to $9.93 billion, with a smaller contribution from residential housing than in 2010.
The value of residential building put in place fell 14 percent to $5.39 billion in 2011, led by a 16 percent slide in new dwellings.
Non-residential activity dropped an annual 5.7 percent to $4.54 billion last year, with big declines in construction of accommodation buildings, hospitals and nursing homes and miscellaneous buildings.
ASB economists said construction activity appeared to have stabilised in the final quarter of 2011. They saw the Official Cash Rate on hold until December.
"Construction levels are likely to remain weak over the first half of 2012, but activity will rise rapidly once the Canterbury rebuild starts in earnest," they said.
"Construction demand pressures are likely to outstrip capacity in the industry, and generate substantial construction inflation which the RBNZ will be very mindful of. However, with ongoing seismic activity, the rebuild process is at risk of being further delayed until 2013. As such, continue to expect the RBNZ will wait until December 2012 before lifting the OCR."