INTRODUCTION
Adapting to shifting economic conditions
Our latest report highlights how Australia and New Zealand’s construction sectors are adapting to shifting economic conditions, including interest rate movements, labour market pressures and evolving infrastructure priorities. While Australia is seeing renewed momentum in residential and utility sectors, New Zealand’s market remains subdued with early signs of stabilisation through policy support and rate cuts.
Australia’s construction outlook strengthens amid sectoral transition
Australia’s economy expanded by 0.6 percent in the June quarter and 1.8 percent over the year, marking a modest rebound following weather-related disruptions earlier in 2025. Growth was supported by household and government spending, though public investment declined as major infrastructure projects reached completion.
Construction activity remains steady across healthcare, education and utilities, with data centres and manufacturing emerging as growth areas. Residential construction is gaining momentum, driven by lower interest rates, population growth and targeted incentives. Infrastructure priorities are shifting toward energy and water systems, reflecting Australia’s net-zero commitments and the rising demand for resilient utilities. While the outlook remains positive, labour shortages and delivery capacity continue to pose challenges.
Economic recovery efforts progress across New Zealand
New Zealand’s economy contracted by 0.9 percent in the June quarter, marking the third decline in five quarters. Activity remains subdued across construction, manufacturing and services, however recent interest rate cuts and easing inflation are helping to stabilise conditions.
The Reserve Bank lowered the Official Cash Rate to 3.0 percent in August, with further cuts expected to support demand. While construction consents remain flat, infrastructure investment is projected to strengthen ahead of the 2026 election. Labour shortages persist, with targeted migration and apprenticeship programmes aimed at helping to rebuild capacity. Although near-term growth is limited, policy adjustments and public sector investment are expected to support a gradual recovery.
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