Strong Construction Growth Helps with Covid-19 Job Losses
Unemployment numbers have dropped dramatically in recent months. The drop is being attributed to a strong growth in construction. The real estate industry has shown big increases in business as well. Despite the ongoing Covid19 crisis, construction seems to be one industry that continues to thrive with consumers looking for great deals in a new or older home.
Small business start-ups are on the rise as well. Though a great many businesses suffered and eventually collapsed during the pandemic, others have thrived.
New Jobs Growth
With unemployment at 4.9 per cent for December 2020 (according to Statistics NZ data), most economists were pleasantly surprised. Their data showed about 21,000 new jobs in the construction sector with about 5,800 jobs being filled by women. Overall, New Zealand now has 278,000 people working in construction and that includes trades like plumbing and electrical, concrete and roofing.
Two of the main drivers behind these surprising statistics are a housing shortage and historically low interest rates. Consumers have shown that they realize how important it is to take advantage of these low interest rates as quickly as possible. In spite of the pandemic, they’re ready to buy new homes and there simply haven’t been enough of those.
Construction Remains Strong
As the housing market continues to grow, many economists believe the construction industry will remain strong regardless of how other industries fare.
David Kelly at Master Builders Federation commented about how many experts had believed that construction would struggle because of the covid crisis. He said that most of the people in his company expected a continuation of high redundancies and even higher unemployment rates. He says that these new statistics show that consumer confidence for a full economic recovery is still high.
“As soon as we see house prices rise, then we often see more residential construction going on,” said Kelly. He also mentioned how consumers are often more likely to purchase new construction as opposed to older homes. With a diminishing supply of older homes, new construction becomes important.
Commercial Construction Up as Well
Kelly was quick to point out that commercial construction was doing better as well. The only exception to this were the hotels and hospitality industry. Other sectors have moved ahead with planned projects. There have been some concerns; he lays those out here, saying, “One (concern) is the availability of land, the second is the availability of materials and that is growing. And third, qualified, experienced tradespeople – that is definitely a constraint.”
Construction Trades Growing
The number of trades people is growing as well, with apprenticeship programs on the rise. This will allow even newcomers to get the training they require so that they can get higher paying construction jobs. Many experts agree that there are never enough highly trained tradespeople.
Jarrod Kerr from Kiwibank said the unemployment figures were “truly remarkable” and “precisely what we want to see.”
Tourism Still Down
He did point out that tourism was still down and there were still supply disruptions that could affect future growth. He finished his statements by saying that New Zealand has fared better than other nations around the world. He points out that the NZ economy is still strong as compared to that of other nations.
New Zealand Strong
“Our economy has outperformed most developed economies around the world.” He also said that, “On the demand side, we have highlighted the need to better price the risk of different home loans. But it is not a demand problem, in our view. The true problems are firmly on the supply side. And any slack we see developing in the labour market should be enticed into housing development.”
He believes that if the current trends continue, New Zealand can expect continued growth in its construction industry and the housing market. With the surge in demand for new homes, he believes that more creative loan solutions could help the growth in sales to be even stronger.