Photo: RNZ
The construction sector said the figures confirmed what it already knew: that times were tough.
Construction was down 2.8 percent in the September quarter, driven by a downturn in residential building construction and construction services.
Master Builders chief executive Ankit Sharma said the construction industry is beginning to recover after a tough few quarters, but it is slow going.
"I think the last quarter was quite tough for the industry, but we are seeing more inquiries for building projects recently, which is a good sign," he told Morning Report.
"It shows that lower mortgage rates and the easing of official cash rates are boosting confidence."
However, he said these inquiries are not turning into sales as quickly and believes it to be because of two reasons.
"People want more certainty or further drops in interest rates before committing to projects, or I think some believe the market hasn't reached the lowest point yet, and are holding out," he said.
But he does think there are some signs of recovery, which he hopes will lead into a more positive 2025.
Sharma also said the number of liquidations in the building and contraction industry was probably as high as its been.
"And the challenge when you have a liquidation of a building company is the cascade effect it has on other trades and other industries and to homeowners," he said.
He urged homeowners to do their financial due diligence before committing into a project with a builder.
Civil Contractors chief executive Alan Pollard also acknowledged the industry had been struggling all year, and anticipated it would struggle into 2025 as well.
A change in government created uncertainty in the marketplace, given there was often a change in direction around infrastructure investment, he said.
"So, Three Waters for example, we found clients like councils were a bit reluctant to continue to invest when they didn't really know what the strength of the downsides might look like."
But the medium- to long-term prognosis was bright, Pollard said.
Civil Contractors NZ chief executive Alan Pollard. Photo: Supplied
"If all goes according to plan, we'll have significant infrastructure investment going forward.
"But our challenge is what happens in the here-and-now, and right now contractors are restructuring, as the GDP figures show, the industry has been downsizing, and that creates some real risk for the future programme, because it does mean that at the point in time when the projects do start coming through, we may not have the capacity to deliver them."
A thriving construction sector needed confidence and certainty, Pollard said.
He would like to see the government bring forward maintenance programmes, improve the procurement process, and invest more in training and development.
Government cuts were to blame for the construction sector's woes, Labour leader Chris Hipkins said.
"The building and construction sector was still booming, as at election day. It's not now. Why's it not booming now? Because the current government cut a whole lot of building and construction projects as soon as they got into office.
"We're now seeing the consequence of those kinds of bad decisions."
Labour leader Chris Hipkins. Photo: RNZ / Samuel Rillstone
The Employers and Manufacturers' Association was similarly unsurprised by the figures.
Manufacturing was down 2.6 percent, driven by manufacturing of metal products, wood and paper products, transport equipment and machinery, and food, beverage, and tobacco products.
Manufacturing had been in contraction for 20 consecutive months, and things were tough, the association's head of advocacy and strategy Alan McDonald said.
"You've had supply chain shocks, you've had suppressed demand, you've had rising costs right throughout the spectrum, whether it's raw materials or components, or labour costs, or electricity costs, all of those things."
While it was a mixed bag, McDonald believed things would look better for the sector in six to 12 months.
"The finance minister is quite right when she says that things are starting to turn a bit," he said.
"We've seen, for example, interest rates come down. We've seen business confidence starting to build."
He remained concerned at rising unemployment, particularly with redundancies, restructures, and liquidations.
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