Construction activity stabilises in Q1: The volume of building work put in place was unchanged in Q1, breaking its previous run of six quarterly declines. This was slightly stronger than the 0.5% q/q fall we had expected, although a 0.6ppt downward revision to the previous quarter (to a 5.0% drop) flattered the Q1 result a little. The sector could hardly be described as in a strong state, with construction activity down 20% from its stimulus-induced peak in late 2022. These data add to the picture of stabilising but still subdued domestic demand.

Looking at the split, residential activity (about 60% of total building activity) was up 2.6% q/q, the first increase in two and a half years (figure 2). The lift was spread across regions, with Auckland, Canterbury and the rest of New Zealand all registering increases. Non-residential activity was down 3.9% q/q, continuing its downward trend over the last year. We have been anticipating a stabilisation in building activity in line with the stabilisation in building consents over the past 18 months and the signal in construction intentions from the ANZBO. The lag from consents to activity has been longer than in the past, however, possibly reflecting an increase in multi-unit construction, or dynamics from the boom-bust cycle in construction activity in the aftermath of COVID-19.

The slightly stronger-than-expected read for the volume of building work put in place is not enough of a surprise to present a risk to our Q1 GDP forecast of 0.6% q/q, and there are plenty more partial indicators for GDP coming out next week.

Read more:
ANZ Data Wrap: 6 June 2025