The Reserve Bank is unlikely to be troubled by the volume of building work for the September quarter being weaker than expected, ASB senior economist Jane Turner says.
Statistics New Zealand figures showed the volume of building work put in place rose a seasonally adjusted 1.5% in the third quarter, from 1% three months earlier. Non-residential construction rose 4.4%, while residential building slipped 0.7%.
The value of work rose 2.2% across all buildings to $3.9 billion in the quarter, with a 5.4% increase in non-residential building to $1.5 billion and a 0.4% gain in residential values to $2.36 billion.
''The trend has been generally rising since the September 2011 quarter, the lowest point in 10 years.
The level is now 43% higher than three years ago, and just 2.3% lower than the series high in the June 2005 quarter,'' Statistics NZ said.
Ms Turner said residential construction work had grown strongly late last year and all this year, but the growth in building consents stalled before the September 20 election.
''Election uncertainty disrupted housing market activity and appears to have disrupted house-building demand as well. Given the outstanding housing shortages in Canterbury and Auckland, we expect to see a resumption in building consent and construction activity growth in the future.''
Consents in non-residential building activity had been strong in the past six months but construction intentions had started to edge lower, flagging the possibility of weaker building demand next year, she said.
Construction activity was slightly weaker than expected but still made a modest gain over the quarter. Residential construction might be slightly down again in the fourth quarter, reflecting stalling growth in the issuing of consents.
Given the sharp increase in construction activity over the past year, the Reserve Bank would be watching for signs of capacity constraints reducing activity growth and intensifying construction-related inflation pressures, Ms Turner said.
So far, there had been limited spill-over of inflation pressures from construction to the broader economy.
The Reserve Bank was likely to remain comfortable, leaving the official cash rate at 3.5% until September next year, she said.
