The Numbers
Statistics New Zealand’s construction sector data for the June 2025 quarter shows a 3.1 percent decrease in sales, representing a fall of $720 million to a total of $22.3 billion. Building work — the residential and commercial construction component — accounted for $7.9 billion of the quarter’s activity, representing 35 percent of total construction sales. That building work figure is 14 percent lower than June 2024.
The longer view is more sobering. Construction sales are 11 percent lower than the equivalent quarter in 2023. When adjusted for inflation, activity volumes have declined 18 percent over two years. Michelle Feyen of Statistics New Zealand observed that “both measures are telling a similar story, with decreases in most quarters over the last two years” — confirming that the decline reflects genuine reduced activity rather than price movement.
Related Sectors Also Weakening
The construction sector’s difficulties have flowed through to related manufacturing categories. In the June 2025 quarter:
- Non-metallic mineral products (including concrete, brick, and tile manufacturing) declined 4.9 percent
- Metal products manufacturing fell 5.1 percent
- Wood and paper products declined 3.2 percent
Manufacturing sales overall declined 3 percent to $33.4 billion. The parallel movements across construction and its supply chain confirm that the slowdown is systemic rather than sector-specific — it reflects the reduced underlying demand for built infrastructure rather than firm-level challenges or competitive dynamics within individual sectors.
The Context for the Data
The June 2025 quarter data represents activity that was underway in a period before the most recent interest rate reductions had fully flowed through to the market. Building consents — the leading indicator for construction activity — have been rising modestly through 2025, suggesting that activity data will begin to reflect improved conditions in subsequent quarters. The consent data leads actual construction activity by typically six to 12 months, so the improvement in consenting will not appear in sales data until late 2025 or early 2026.
What This Means for Firms Planning Ahead
For construction businesses managing their capacity through the current period, the sector data confirms the environment is still difficult but that the conditions for recovery are developing. Firms that have maintained their core workforce and operational capability through the downturn are well positioned to respond quickly when workloads increase. Those who have reduced capacity significantly face a longer lead time to ramp back up — which may mean missing the early phase of the recovery when margins are typically strongest and competition for capacity is at its highest.
