(Bloomberg) — New Zealand residential construction slid to a four-year low last quarter, in a further sign the economy may have tipped into another recession.
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Spending in constant prices — a measure of volume — fell to NZ$5.2 billion ($3 billion) in the three months through June, Statistics New Zealand said Friday in Wellington. That’s the lowest level since the same period in 2020, when the nation was in a lockdown during the pandemic.
Economists generally expect the economy shrank in the second quarter as elevated interest rates doused spending and investment. The Reserve Bank, which embarked on an easing cycle last month, anticipates that activity also contracted in the third quarter, setting the economy up for its third recession in less than two years.
Today’s report showed residential construction declined for a seventh straight quarter, dropping 0.7% from the first three months of the year. Overall building, which includes non-residential activity, fell 0.2%.
The statistics agency will release second-quarter gross domestic product data on Sept. 19. Other recent reports have shown a decline in exports and retail sales, reinforcing expectations of a contraction.
Construction activity has been buffeted by rising costs of both materials and finance, pushing buyers and developers to the sidelines. Home-building approvals in the 12 months through July were down 22% on the year-earlier period.
Sentiment in the industry is weak. Fletcher Building, the nation’s largest supplier of wallboard, timber and other construction materials, last month said volumes in its materials and distribution business were under pressure and are expected to drop at least a further 10% in the year through June 2025.
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