Stronger construction activity is expected to have driven
increased economic activity in the three months to September.
Statistics New Zealand will this week release its GDP (gross
domestic product) data, which is a measure of the output
produced in an economy during a set period.
ASB chief economist Nick Tuffley expected GDP to have
increased 0.6% over the quarter.
''This follows strong growth over the first half of the year,
partly reflecting temporary factors such as exceptionally
strong dairy production as a result of excellent weather
''While pasture conditions have generally remained
favourable, we do not expect dairy and meat production will
be as strong over the coming year.''
Beyond the boost from strong agriculture and food
manufacturing production, activity over the first half of the
year was also boosted by post-earthquake rebuilding, he said.
That was also expected to have carried on into the September
quarter. Building work in place data showed a substantial
increase in construction activity,
which was particularly strong in Canterbury. Statistics NZ
noted that Canterbury accounted for about half of the
increase in both residential and non-residential building.
Encouragingly, the recovery in non-residential construction
activity finally appeared to be starting, Mr Tuffley said.
That followed some weakness seen over the first half of the
Much of the strength in non-residential construction in the
third quarter appeared to be driven by rebuilding in
Canterbury. Beyond the rebuilding, businesses had generally
been cautious about non-residential investment given the
offshore uncertainty and modest demand.
Recent confidence surveys suggested businesses might finally
be starting to feel more optimistic towards investing in new
commercial buildings, he said.
On top of the Canterbury rebuild, stronger housing market
activity appeared to be encouraging house building,
particularly in Auckland.
The continued increase in Auckland building consents in
recent months suggested construction activity would continue
That should help alleviate the acute housing supply
constraints in the region, although the full effects would
take a year or more to flow through, Mr Tuffley said.