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Construction sector buoyed by govt boost

NZN 23/06/2017 Paul McBeth

New Zealand's construction sector is increasingly upbeat about the growing infrastructure market, which will get a boost from the government's planned $32.5 billion investment over the next four years.

This should help offset a gloomier buildings market as funding for residential development becomes harder to secure.

Aecom's annual survey of sentiment in the infrastructure and buildings construction sector shows a split between the two sub-sectors.

Those on the infrastructure side expect increased spending over the coming three years, with 68 per cent of respondents seeing a positive investment outlook and nearly 70 per cent expecting more work.

Those on the buildings side have pared back their optimism as building firms work out the impact of demand-side efforts by policymakers to rein in the housing market, with 32 per cent anticipating increased investment and 58 per cent predicting a bigger workload in the coming year.

Finance Minister Steven Joyce, who launched the report in Auckland on Friday, told BusinessDesk the sector is still "positive" but is figuring out "how to handle that growth," which he characterises as being like the southeast Queensland boom.

Mr Joyce said lending curbs by the Reserve Bank and trading banks' tighter credit criteria were "having a bit of an impact" on the buildings side.

Government figures showed the value of building work put in place fell in three months ended March 31 due to a sharp drop in non-residential construction.

Still, construction has been a major plank to the country's economic growth as the Canterbury rebuild and Auckland house-building programme stir activity, accounting for 6.25 per cent of the economy and employing 250,000 people.

Mr Joyce said the pipeline of work and government investment means the sector will continue to be a core part of economic growth in coming years.

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