Data Flash (New Zealand)
Key points
The number of new dwelling consents issued decreased 4.3% mom in May following a 3.7% rise in April and was 13.9% lower
than a year earlier. However, non-residential building consents with a value of $256m were issued in May, taking the
three-month running total to 40.6% higher than a year earlier. Consents for hospital and education buildings help to
explain the strong result, but strength was evident across most building types. Non-residential buildings account for
around one third of total building activity.
Commentary
As the chart below shows, typically there is a four-month lag between an improvement in general housing market activity
(as reflected in house sales) and the associated flow-through to building consents (and thus new construction activity).
The current nascent recovery in housing market appears to be developing in line with past relationships. This suggests
that a more solid upswing in building consents and construction activity should begin to have a positive impact on GDP
from Q3 2001 onwards. The likelihood of this recovery being sustained depends on whether the current favourable
configuration of robust levels of consumer confidence, growing household incomes and a reduced migrant outflow
continues. On this score, developments in the global economy, export commodity prices and domestic monetary policy will
continue to be of key importance.
Ends