NZ: Total building work volumes fell 0.9% in Q1 2018 - ANZ

Liz Kendall, Senior Economist at ANZ, notes that the volume of total building work put in place fell 0.9% q/q for NZ economy, following a 1% q/q rise in Q4.

Key Quotes

“This was a touch weaker than we had expected (and the market expectation of a 0.5% increase), but it is consistent with the overall picture of building work bobbing around at a high level and struggling to push higher. That follows a downwardly-revised 1% lift in Q4. In nominal terms, total activity was flat.”

“The fall in Q1 was driven by non-residential building work, which fell 1.5% q/q. Non-residential work can be volatile and this dip followed a 3.8% rise in Q4. Residential volumes dipped 0.5% q/q, following a 0.8% dip in Q4. We expect this softening will prove temporary, with consents having rebounded in 2018. Nonetheless, we think residential work will struggle to push beyond recent highs.”

“Today’s figures in combination with retail trade figures present modest downside risk to our view on Q1 GDP growth. Retail trade increased a modest 0.1% q/q, compared with a 1% rise expected by the market. There are a few partial indicators still to be released, which will add more colour to our GDP pick. At this stage, we are comfortable with our provisional Q1 GDP estimate of 0.6% q/q (2.7% y/y).”