New Zealand Building Permits Drop 4% in May

New Zealand building permits fell a seasonally adjusted 4.0% in May from April, landing at 3,801, Statistics New Zealand reported Thursday.

The decline follows a 1.9% drop in April and marks the second consecutive monthly contraction. Annual comparisons show permits running 12% below the same month last year, the agency said.

Residential approvals drove the weakness. Standalone house permits fell 5.2% on the month, while multi-unit approvals slipped 2.1%. The Auckland region, which accounts for roughly a third of national building activity, saw permits drop 6.8%.

Non-residential building consents also softened, declining 3.1% in May after a 2.4% gain in April. The value of non-residential work approved fell to NZ$1.2 billion from NZ$1.3 billion the prior month.

The construction sector has been under pressure from high interest rates and weak consumer confidence. The Reserve Bank of New Zealand has held the official cash rate at 5.5% since May 2023, and markets do not expect a cut until late 2024 at the earliest.

Builders and developers have cited financing costs and softer demand as constraints on new projects. The May data suggests the pipeline of new work continues to shrink, which could weigh on construction employment and GDP in coming quarters.

Statistics New Zealand cautioned that monthly permit figures are volatile and subject to revision. The agency publishes June data on July 30.