Brakes go on economy as building growth slows

By JIM EAGLES

Reserve Bank Governor Alan Bollard got a couple of last-minute indicators that the economy was slowing when statistics on building activity and new-car registrations were issued yesterday.

The seasonally adjusted real value of building work during the December quarter rose just 0.7 per cent, a far cry from the 11 per cent the previous quarter.

And the number of new-car registrations during February was down 15 per cent from the previous month.

Both activities are still running at levels well ahead of a year ago but they give a further indication to the Governor, who delivers his quarterly monetary policy statement today, that the economy is no longer racing ahead.

Robin Clements, economist with UBS Warburg, said it had been expected that the building figures would show another lift in activity, especially considering the pace at which dwelling consents rose in the same period.

It was possible, he said, that the construction industry was working to capacity.

"Certainly reported delays in getting builders to start work and price pressures within the sector suggest this might well be the case."

Statistics New Zealand's building figures show $1.4 billion of residential work and $872 million of non-residential work during the December quarter.

The number of new car registrations in February, at 4885, was up 14 per cent on February last year, while used car registrations totalled 11,694, up 1 per cent on a year before. There were 1524 commercial vehicles.