Building sector at a glance: April – June 2009
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Since the March 2009 quarter, sector activity has been low but is expected to pick up slightly, largely as a result of an end to the decline in residential building activity in recent months. Although the number of new dwelling consents was low, its trend has been rising since January 2009 after a series of falls that began in July 2007. The value of residential building consents was $5.033 billion in the year ended July 2009 and 29.5 percent lower than a year ago.
The value of non-residential building consents was $4.705 billion in the year ended July 2009, a 6.6 percent increase compared to the July 2008 year. However, once the large projects (worth more than $25 million) are excluded then there has been a year-on-year reduction in each month since January 2009. Large project consents account for $820 million in the July 2009 year, up from $290 million in the July 2008 year. The total floor area of non-residential building works consented has also fallen by 18.8 percent in the year ended July 2009. Infometrics expect a decline in non-residential building activity by the end of the year due to a decline in investment.
The observation that more people were employed in the sector but employed for fewer hours in total was made previously for the March quarter. This continued in the June 2009 quarter. The number of people employed in the construction sector was 0.9 percent more in the June 2009 quarter compared with the same time in 2008, while the number of hours worked fell by 8.5 percent over the same period. The number of ‘building trade’ and ‘building and related’ workers leaving New Zealand peaked in the year to January 2009 and has since declined in annual numbers.
Capital, production and labour costs continue to rise slowly, and industry leaders think this will continue. Residential building costs rose by 0.8 percent in the year to June 2009 compared with 4.4 percent in the year to June 2008; non-residential building costs declined slightly by 0.1 percent compared with a 2.8 percent increase in the previous year. This slight fall in non-residential building costs was driven by lower labour rates and contractors’ margins.
Value of all building work put in place fell, led by residential building work; and trend continues down
- The unadjusted value of all ‘building work put-in-place’ in the June 2009 year was $11.867 billion, down 13.4 percent from the previous year, of which 54.5 percent was residential building.
- Falling price-adjusted trend values for all ‘building work put-in-place’ have continued during the quarter to June 2009, with a decrease of 13.1 percent from the June 2008 quarter.
Residential building activity low but consent levels showed increase
- The unadjusted value of all residential building work put in place in the June 2009 quarter shows a drop of 24.8 percent from the same quarter in 2008.
- The latest July 2009 statistics for the number of new dwelling consents were still low at 1,214 compared to historical levels, but show an increasing trend since February 2009. The number of consents for new dwelling units (including apartments) authorised in the quarter to June 2009 was 38.1 percent lower than in the same quarter in 2008.
- The value of residential building consents issued was $5.033 billion for the year ended July 2009, 29.5 percent lower than a year ago. The trend has flattened in recent months after a series of falls.
Value of non-residential building work fell in the June 2009 quarter in line with the downward trend for the number of non-residential consents and less impact from large project spending
- For the year ended June 2009, the value of non-residential building work put in place was $5.314 billion and 4.9 percent higher than the previous year.
- The unadjusted value of non-residential building consents issued increased by 6.6 percent in the year to July 2009 to $4.705 billion. The largest increases were in ‘hostels and boarding houses’ and ‘social, cultural and religious buildings’. The largest falls were in ‘storage buildings’ and ‘hotels and other short term accommodation’.
- Although, the values for non-residential building consents for the year ended July 2009 was 6.6 percent higher than a year ago, since June 2009 the monthly values have recorded a decline compared to the same time last year. Note that the trend values for non-residential building consents was removed from the July 2009 statistics in the meantime as Statistics New Zealand is reviewing its current practice of generating this trend series.
Capital, production and labour costs continue to rise
- The Capital Goods Price Index, in the year to June 2009 quarter, measured price increases of 0.8 percent for residential building, 5.8 percent for other construction, but a fall of 0.1 percent for non-residential building. This compares with an overall CGPI rise of 4.1 percent.
- The Producers Price Index for construction industry inputs for the year to the June 2009 quarter increased 3.6 percent, compared with a fall of 1.2 percent for all industries.
- Labour costs (as measured by the Labour Cost Index) increased in the year to June 2009 by 2.3 percent for building trade workers, and 3.1 percent for the construction industry generally; compared with the increase of 2.8 percent for all industries and occupations combined.