Construction sector activity at six-year low, 16,000 jobs lost in past two years alone

A new report on the construction sector shows job losses and insolvencies. Photo / Greg Bowker

Construction sector activity is at a six-year low with 16,000 fewer jobs in the past two years alone, a new report has found.

Economists Shamubeel Eaqub and Rosie Collins wrote a sector overview for the NZ Chinese Building Industry Association.

“Construction activity, excluding price effects and adjusting for a growing population, is now at the lowest level since 2019,” they wrote.

That activity is measured in volume per capita, according to a graph in the report.

As of June 2023, there were 310,000 jobs, seasonally adjusted, in the sector.

But by June this year, that had fallen by 16,000 jobs to 294,000.

Construction activity is at a six-year low. Source / NZ Building Construction Sector report

“Job losses during a recession are understandable, but the construction sector is labour-intensive.

“When the recovery comes, labour shortages will become an issue,” the economists wrote.

Shamubeel Eaqub, one of the economists who wrote the new report. Photo / NZME

Around 100,000 jobs in the sector are related to industries that are highly reliant on trade: architecture, engineering, fabricated metals manufacturing such as roofing, wood products, electronic and electrical equipment in cables, lighting and appliances, and quarrying.

Less reliant industries include legal, accounting and banking. They benefit from the construction sector but have a diversified mix of customers.

The construction sector downturn had been sharp in the past six years, with falling revenues and rising defaults, the report said.

Construction sector employment has dropped in recent times, as shown in this graphic from Stats NZ that appears in a new report on the sector.

“The current downturn has been very challenging for some businesses. Credit defaults in the construction sector increased by 14% annually, and company liquidations have increased by 48%, according to credit bureau Centrix,” the report said.

Despite an increase in financial stress and business closures, the number of construction enterprises has only fallen by about 1000 to 81,000.

There are 294,000 directly employed in the sector but a further 247,000 work for suppliers.

The sector had annual revenues of $94 billion in 2025.

Revenue has fallen from last year because of a broader economic slowdown.

This has affected workers, owners and suppliers.

The construction sector relies on many suppliers, with $65b in annual payments.

The number of people pursuing construction-related vocational training has slowed in recent years because of changes in economic conditions, changes in policy settings and increased migration of New Zealanders to Australia.

After rising strongly for 12 years, the residential construction sector is suffering a downward correction. Photo / Fiona Goodall

“While we don’t have up-to-date statistics, earlier experiences of high migration to Australia show that we may lose up to 8000 construction workers to Australia a year,” the report said.

The sector loses 8% of working days to injuries, roughly twice the rate for all industries.

There is an increasing trend in the severity of injuries, even though the number of injuries is reducing.

Fewer but more severe injuries means longer away from work, the economists noted.

“This has serious business implications, with the injury-related lost hours alone equivalent to $2.2b of wages and profits per year.”

WorkSafe has also reported an average of 10 fatalities a year in the sector in the five years to 2024, which has extremely high social and economic costs, they wrote.

NZ Chinese Building Industry Association president Frank Xu acknowledged the downturn.

But he said he is seeing signs of a change and momentum returning.

Building and Construction Industry Training Organisation director Greg Durkin welcomed the report.

It broadened understanding of how economic conditions affect the sector, he said.

Anne Gibson has been the Herald‘s property editor for 25 years, written books and covered property extensively here and overseas.