Data Flash (New Zealand)
Key points The number of new dwelling consents issued fell 7.2% mom in August to a level 35% lower than a year earlier.
Recent monthly movements have been very volatile. Non-residential building consents with a value of $273m were issued in
August, the second strong month in a row and the strongest result this year. The value of non-residential consents
issued in the three months to August was 37% stronger than a year earlier. The total value of building consents issued
in August was $592m, 8% lower than a year earlier. The total value of building consents issued in the three months to
August also declined 8%.
Commentary As Statistics New Zealand note, dwelling consents data has been particularly volatile in recent months,
making it difficult to discern a trend. However, given the current rate of household formation, we assess the current
rate of consents - around 19,000-20,000 annualised - to be sustainable on a long-term basis. This suggests to us that
recent activity levels are likely to represent the bottom of the current cycle. However, at this stage, with population
growth modest and confidence low, we see little chance of a strong cyclical rebound.
The second consecutive month of strong non-residential consents makes us more comfortable with our forecast for
non-residential building activity. The previous weakness, if maintained, would have led us to have revise down our
forecast of non-residential investment activity over the coming year. Residential investment accounts for around
two-thirds of buildings construction with non-residential investment accounting for the remaining third. Today's data
leaves us comfortable with our forecast of a return to positive GDP growth in Q3 following an expected 0.8% qoq decline
in Q2 (data on the latter to be published this coming Friday).
Darren Gibbs, Senior Economist (64) 9 351 1376
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