World Economy

New Zealand Growth Remains Robust

The number of dwelling consents issued rose 2.6%.The number of dwelling consents issued rose 2.6%.

Building consents in New Zealand have hit an 11-year high, activity in the services sector remains robust, while business and consumer confidence are buoyant. In construction, the number of consents issued for new houses totaled 30,161 in the year to October, propelled by a rising population and low interest rates.

“The construction sector is very busy,” ANZ Bank senior economist Sharon Zollner said. There were signs the growth in consents was flattening out, though it was still at “strong levels”, she said, radioNZ reported.

The number of dwelling consents issued lifted 2.6% to 2,683 in the month of October. However, the slowing of house-building growth in Auckland was expected to put further pressure on already rising prices in an increasingly unaffordable city.

“It is a concern in that the region clearly still has a housing shortage. But it’s quite understandable as well,” Zollner said. “They are basically flat out in the construction sector. There are hardly any workers or cranes to be found, and in addition to that it’s getting harder to get finance for big projects.”

Separately, services sector activity remained robust in the lead-up to Christmas, despite the closure of major transport links at the top of the South Island due to last month’s 7.8 earthquake in north Canterbury.

The BNZ-Business New Zealand Performance of Services Index rose 1.3 points to 57.9 in November from a month earlier, with gains in sales and new orders. A reading above 50 indicates expansion.

“A lot of respondents noted that (the quakes) as a major influence on their business,” BNZ senior economist Doug Steel said. “Interestingly, they weren’t all negative. For some people quakes have generated quite a bit of activity. You would normally expect the spending indicators and retail activity to be picking up into Christmas, and indeed that did.”

Retailers will also be buoyed by a sharp rise in consumer confidence to two-year highs, with low income and rural households driving improved optimism.

The Westpac McDermott Miller Consumer Confidence Index gained five points to 113 in the past three months. A reading above 100 indicates more optimists than pessimists.

“Households’ employment situation has really improved over the past year as the economy has continued to strengthen,” Westpac senior economist Satish Ranchhod said.

“The second big factor going on is the change in the outlook for the rural sector. Dairy prices have improved after a period of softness and that’s really changed the sentiment for a lot of rural communities.”


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