Reporting season results show construction sector still booming despite economic misery - expert

The corporate reporting season in New Zealand is in full swing, with Fletcher Building's announcement last week showing the country's construction sector is still booming despite global economic misery.

Reporting season is when New Zealand businesses post their results, showing shareholders and investors how they've performed over the past 12 months.

Fletcher reported big full-year earnings last week, with net profits up 42 percent to $432 million. 

Milford Asset Management portfolio manager Frances Sweetman said construction was still "absolutely booming".

"The market's been expecting that the construction industry will slow because house prices have fallen," she told AM. 

"In fact, the operators don't expect the construction market to start to soften or slow down for at least another six months - if not longer - because there's just a huge backlog of work still to be done. 

"The bad news from that is construction prices - or at least materials costs - are still rising.

"Apparently the ease in the availability of materials and the availability of labour is getting a bit better so for those people who have been stuck waiting to build their house, that looks like that might ease up a little bit - but prices are still rising albeit a little bit slower."

Meanwhile, Sweetman said consumer demand was softening - with the likes of New Zealand home meal kit firm My Food Bag indicating it was set to report a full-year profit drop in the 12 months to June.  That comes after its profits skyrocketed to $20 million in the year to March. 

"It's really just the first signs of that customer weakness," Sweetman said.

And, in more bad news for the news consumer, costs were still rising across the board, she said.

"At the moment… because costs are still rising; labour costs, materials costs, even debt costs - they're trying to raise prices and pass that through to the consumer wherever they can," Sweetman said. "We're watching that really closely so we can try and respond."