New Zealand: Construction to remain solid driver of GDP - ANZ

FXStreet (Bali) - Philip Borkin, Senior Economist at ANZ, reviews the number of residential dwelling consents in New Zealand, published earlier today, noting that it rose 2.3% m/m sa in December, expecting the construction sector to remain a solid driver of GDP growth over the next 12 months at least.

Key Quotes

"Stripping out the more volatile multi-dwelling component, the number of “houses” consented lifted a respectable 3.4% m/m sa, which is actually the highest level since August 2007."

"On a trend basis, the theme remains one of continuation. Nationally, the monthly trend in issuance has lifted to its highest level since mid-2004 (although the rate of growth is slowing modestly). This growth has largely been led by Auckland, where issuance is also at its highest level since mid-2004 on a trend basis."

"The value of non-residential consent issuance was a solid $529m sa (+11% m/m) in December, which is well above the average seen over the 2013/14 period. In fact, on a trend basis, issuance is accelerating at a monthly pace of 2.8% and is at all-time highs."

"Looking forward, there is plenty of discussion on the impact on economic activity as earthquake rebuild work slows. However, we are far more positive. Today’s data is consistent with that positivity."

"We believe there is enough work going on around the rest of the country to offset the drag that the rebuild peak will deliver (just look at the housing needs, infrastructure projects and associated commercial activity pipeline in Auckland alone)."

"The construction sector is expected to remain a solid driver of GDP growth over the next 12 months at least."