There has been a sharp increase in positivity among construction sector professionals since spring, the latest survey of business opinion shows.
The building sector is the most upbeat in New Zealand heading into 2025, according to results of the latest NZIER Quarterly Survey of Business Opinion. With a net 29% of the building sector firms surveyed feeling positive about the general economic outlook for the coming months. This was a sharp turnaround from the 9% of building sector firms feeling pessimistic in the September quarter and over half in the first half of 2024.
However, a significant proportion of building sector firms reported a contraction in new orders and output, in the report released in mid-January, but expected a recovery in activity ahead. This expectation is supported by the pipeline of construction work as indicated by the measure of architects’ work in their own office. While architects expect the pipeline of housing and commercial construction to remain broadly flat over the coming year, architects surveyed expect an increased pipeline in the next 12 to 24 months.
Inflation pressures remain soft
Cost and pricing indicators point to a continued easing in inflation pressures in the New Zealand economy. The proportion of firms reporting higher costs decreased to 35% in the final quarter of 2024. Meanwhile, the proportion of firms raising prices in the December quarter was still historically low at 10%. The weak demand continues to reduce capacity pressures, which in turn weighs on inflation pressures in the New Zealand economy. This is reflected by the continued dominance of the lack of sales, which is reported by firms as the primary constraint on their business.
This sentiment was echoed by Kiwi economist Tony Alexander who released his survey of spending plans early this year, indicating numbers of homeowners planning renovations had strengthened since September; 10% of survey respondents were planning to spend more on home renovations come January.
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