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The construction sector had a tough end to 2024, but a major bank says recovery is likely later this year.

Stats NZ data released today showed the country’s total building volume fell 4.4% in the last three months of the year compared to the September quarter.

The value of residential building work was down 4.9% compared to the previous quarter, and non-residential work was down 3.1%.

“Restrictive financial conditions and elevated building costs have weighed on home-building activity by both occupiers and developers in recent history,” ASB economists said today.

The ASB note prepared by economist Wesley Tanuvasa said the decline in the December quarter (Q4) was worse than expected.

And the economists said the sector was likely to remain depressed until the second half of this year.

“Our view remains that the overall economy expanded in Q4, but some sectors will still be doing it tough, including construction.”

In the year October 31, construction sector job numbers fell by 5.3% or 11,141 jobs.

And we will not know for another fortnight whether the country was still in recession in the December quarter.

GDP data for the December quarter is not due until March 20.

Another cut to the Official Cash Rate (OCR) would be a big help to people working in construction, the ASB economists said.

They expected another 50 basis points of cuts to the OCR cuts over the next few months.

Westpac chief economist Kelly Eckhold told the Herald Adrian Orr’s resignation as Reserve Bank Governor yesterday was unlikely to have much impact on the OCR.

The OCR is 3.75%, down from 5.5% last July.