New Zealand concrete output hits fresh low in cooling economy
Economists expect cheaper borrowing costs will eventually encourage building, which will see the pace of the economic expansion pick up in the second half of the year
[WELLINGTON] New Zealand’s concrete production slipped to the lowest level in more than 10 years as cooling economic growth and global uncertainty curb home construction and investment in new commercial buildings.
Output fell to 3.7 million cubic metres in the 12 months to June, Statistics New Zealand said on Tuesday (Aug 12) in Wellington. That’s down 5.9 per cent from a year earlier and the weakest annual reading since late 2014.
A construction slowdown is contributing to a sluggish recovery from a deep recession last year, with at least two local economists forecasting the economy failed to grow in the second quarter. A steady reduction in interest rates, which the Reserve Bank of New Zealand (RBNZ) is tipped to continue later this month, has so far failed to spark home-building, while businesses remain reluctant to invest in new offices and warehouses.
Economists expect cheaper borrowing costs will eventually encourage building, which will see the pace of the economic expansion pick up in the second half of the year.
The number of home-building consents in the 12 months to June rose 1 per cent from the year earlier, suggesting that demand may be finding a floor. Still, the total permitted floor area of non-residential construction fell 5.2 per cent in June of the year.
The RBNZ is tipped to cut the Official Cash Rate to 3 per cent from 3.25 per cent on Aug 20, but economists are split on whether further cuts are likely. Investors see about a 60 per cent likelihood the benchmark will fall to 2.75 per cent by the end of the year, swaps data show.
Today’s report showed concrete production has slowed from an annual peak of almost 4.8 million cubic metres in late 2022. Output in the three months ended Jun 30 fell 10 per cent from the year-earlier quarter to 891,909 cubic metres. BLOOMBERG
Share with us your feedback on BT's products and services
