New Zealand's building activity continues to rise in September quarter

Total building work put in place rose 0.5% in the September quarter in seasonally-adjusted terms, continuing the recent strong run that has seen activity reach its highest level in a number of years. The composition of the gains in the latest quarter included a 2.9% rise in residential activity, and a 2.6% fall in nonresidential activity. Looking over the last several quarters, it is clear that much of the growth since 2012 has been driven by increased residential activity. First, the Canterbury rebuild drove residential activity up and now, even as that work slows, residential building activity is cranking up in Auckland. 

Despite the slump in non-residential construction volumes recorded in the September quarter, the trend there is also clearly up if we look back over the last two years. Nonresidential projects tend to be larger than residential projects, and can be lumpy. One quarter may see the start of a large number of projects, or one massive project, while the next quarter may see much less activity in a small economy like New Zealand's. Housing (apartment blocks aside) tend to be smaller, discreet projects with shorter build times, meaning less volatility from quarter to quarter. 

So although the September result was weaker than the market forecast of a 1.8% increase, and lower even than the forecast of 1.5% growth, the story remains remarkably consistent: construction activity remains solid overall. Canterbury residential activity is slowing, Auckland residential is growing  strongly, and the overall trend in non-residential activity is up.