NZ total construction activity rises by 2.7 pct in December quarter; Q4 GDP growth to remain modest

New Zealand’s total construction activity rose by 2.7 percent during the December quarter, higher that what was forecast by Westpac Research at 1 percent. With this, it leaves the level of building activity up 3 percent over the past year.

The December gain was underpinned by a 5 percent rise in non-residential construction. That was above our forecast for a 1 percent rise. Gains have been strongest in Auckland, and have been seen in areas like retail stores and hotels.

Residential construction rose by 1.2 percent over the quarter, with the rise also centred on Auckland, where building levels are up 15 percent over the past year. And with a strong increase in consents in recent months, building activity in Auckland is set to take another leg higher over the coming year, Westpac Research reported.

Strength in Auckland has more than offset the continued wind-down in home building in Canterbury. Building levels in Canterbury are down 10 percent over the past year.

"We expect that home building in the region will continue to gradually wind back over the next few years," the report added.

Meanwhile, home building activity in the rest of the country was up around 6 percent over the past year.