New Zealand's residential construction activity dropped to its lowest level in over four years last quarter, indicating a subdued economic recovery from the recession.
According to Statistics New Zealand, construction spending in constant prices, a measure of volume, declined by 4.9% from the third quarter to NZ$4.54 billion ($3 billion).
This marks the lowest level since the second quarter of 2020, when the country was under pandemic-related lockdown restrictions.
The ninth consecutive quarterly decline in home construction reinforces concerns that economic growth in the three months through December may remain modest, Bloomberg reports.
This comes despite stronger-than-expected retail sales and a positive contribution from net exports. Most economists anticipate that gross domestic product grew during the quarter, following a 2.1% contraction over the six months ending in September.
Furthermore, this latest report revealed that non-residential construction declined by 3.1% in the quarter, while total construction volumes dropped 4.4%, marking the sixth consecutive decline.
The country’s construction sector has faced ongoing challenges, struggling to rebound after being hit earlier in 2024 by rising material and financing costs. Although interest rates are now decreasing, the effects of the recession and growing unemployment have kept buyers and developers on the sidelines.
The housing market has remained sluggish over the past six months, with building consents in the 12 months through January declining by 7.2% compared to the previous year.
Statistics New Zealand is set to release Q4 GDP data on 20th March. Local economists will finalise their forecasts after additional reports on manufacturing production and wholesale trade are published in the coming days.