Golden run set to continue for construction employment

This article first appeared in Mitre 10 Trade Quarterly – Winter 2017.

Employment in the construction industry grew 7.7% in the year to March 2017, according to Infometrics estimates.  This growth was the sixth consecutive year of expanding employment, following on from a total increase in job numbers of 15% since 2011.  Unsurprisingly, the bulk of the latest year’s lift in employment took place in Auckland, and the region is expected retain its lead for employment growth over the next four years.  In contrast, employment in Canterbury’s construction sector has begun winding down as both residential and non-residential rebuilding activity have come down from their 2014 and 2016 highs.  We’re anticipating about 3,000 job losses in Canterbury’s construction sector over the four years to March 2021.

Although Auckland is currently dominating the outlook for construction employment, building activity and employment are also expected to grow in Waikato, Northland, and Wellington.  Strong population growth in these areas has not only driven up the build rate for houses, but also the need for more facilities such as schools, shops, and offices.  Given the expanding population base, we expect construction employment in these regions to increase by 8.4%, 5.1%, and 16% respectively over the next four years.

Parts of the Otago region suffer from a mild case of Auckland’s syndrome – not enough houses – and there are a few large building projects there to keep people busy over the next few years (most notably, redevelopment work at the University of Otago in Dunedin).   The Otago region is expected to record the second biggest lift in construction employment (after Auckland) during the next four years.

Employment in the construction sector in Auckland is expected to rise 2.7%pa on average over the four years to March 2021.  By comparison, Infometrics estimates show that employment in Auckland’s construction industry rose 8.6% during March 2017 year.  Although the housing undersupply issues in Auckland are well recorded – Infometrics estimates that the undersupply of housing in Auckland reached 38,600 dwellings by the end of 2016 – difficulty in getting workers to move to Auckland, along with a maelstrom of affordability and financing issues hampering overall building activity, mean that employment growth in Auckland’s construction sector will be slower over the coming years.

Breaking employment growth down by occupation shows that the greatest demand in Auckland will be for builders and builder’s labourers.  Employment of builders and labourers in Auckland is expected to grow by 9.6% (1,400 people) over the next four years.  Not to be left behind, employment for electricians is expected to grow 8.8% and painters 14% also over the same period.

The mix of workers in demand at a national level is not that dissimilar to that in Auckland – although a higher proportion of electricians will be employed in the Auckland region.  Employment of builders is expected to rise 3.4% over the next four years, while employment of builder’s labourers is set to increase 10%.  Demand for painters is predicted to rise 10% by March 2019 before easing over the next couple of years to be 8.0% higher by March 2021.  From bricklayers, to drainlayers, to plumbers, most occupations in the construction sector are expected to see an increase in demand for workers.

But there are a few occupations that are expected to see flat of falling job numbers, including joiners, plasterers, and cabinet makers.  Growth in employment for joiners in the March 2017 year was not bad, at 4.4%, and although we expect employment in this occupation to grow over the next two years, reducing demand for renovations is expected to joinery work ease in 2020 and 2021.  Demand for cabinetmaker work is expected to start slipping by 2019.  But even at its worst, the job losses in construction industry subsectors are relatively minimal and are offset more than 20 times over by employment gains in other construction occupations. Over the four years to March 2021, employment in the construction sector is expected to grow by a total of 14,000 jobs.

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