The recent earthquakes that destroyed many homes and infrastructure in New Zealand have somehow driven a housing boom in the country. But as the rebuilding kicks into high gear, the construction industry is at capacity. CNBC has the full report:
New Zealand needs workers by the thousand to keep its building boom going.
From electricians, brick layers and carpenters, through to architects, engineers and quantity surveyors, the thousands of open jobs are threatening to derail growth.
Almost 80 percent of construction companies reported vacancies in 2016, with 58 percent of those saying jobs were hard to fill, according to new data from Statistics New Zealand.
Labor pains are already weighing on markets. Shares of Fletcher Building have dragged on the S&P/NZX 50 this week, as the stock nears a 12-month low after slashing guidance by around NZ$100 million ($70.07 million).
The country’s biggest builder now expects full-year operating earnings of between NZ$610 million and NZ$650 million ($427.42 million and $455.45 million), versus a NZ$720 million to NZ$740 million ($504.5 million and $518.51 million) range forecast just a month ago.
Chief Executive Mark Adamson cited spiraling wages and labor-related project delays for the downgrade.
“It’s the tightness of the market, the availability of subcontractors, and subcontractors obviously pricing to economics 101,” he told investors on a conference call.
And while the RBNZ stood pat Thursday, citing “extensive geo-political uncertainty,” the longer-term outlook is positive, supported in large part by construction.
The building boom is a decade in the making, as infrastructure spending increases and house prices climb.
“Residential construction is obviously booming,” Guy Davidson, director of construction specialists Cobalt Recruitment, told CNBC.
“There’s a shortfall of about 30,000 to 40,000 homes in Auckland currently and more around New Zealand generally.”
“Non-residential construction is absolutely booming as well… the sector is actually doing precisely double today than it was back in 2011.”
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