As new figures continue to emphasise the fall off in house building, there are fears 35,000 jobs could be lost in the construction sector.
Numbers out today from Statistics New Zealand (SNZ) show the seasonally adjusted volume of residential building work put in place in the September quarter was the lowest since June 2002.
Commenting on the data, Goldman Sachs JBWere analyst Shamubeel Eaqub said the outlook for the construction sector was clearly "very weak".
"As activity weakens in the sector the prospect of job losses is intensifying," he said.
He estimated the sector to be over-staffed by about 35,000 workers, more than the 33,000 increase in jobs in the sector during the past five years.
"Given the construction and housing-related sectors (directly through financial services for example and indirectly through retail sales etc) have been such significant contributors to employment growth in recent years, the potential unwind is a source of risk for the economy," he said.
"The domestic recession is clearly worsening and we expect this to be compounded by a global recession."
He expected further cuts in the official cash rate to 3.5 per cent by mid-2009, from 5 per cent now.
The data published today by SNZ showed that in the latest quarter the seasonally adjusted volume of residential building work put in place fell 7.9 per cent, while in the past year the volume of residential building work fell 22.1 per cent.
The volume of residential building work put in place had been falling since the most recent peak in September 2007, SNZ said.
For the year ended September 2008, the unadjusted value of residential building work put in place was $8 billion, down 3.5 per cent from the previous September year.
The seasonally adjusted volume of non-residential building work rose 5.8 per cent in value in the September quarter, following falls in the previous two quarters.
In the latest quarter, a higher-than-usual number of building jobs each had a value of more than $10 million, principally in the commercial buildings category, SNZ said.
For the September year, the value of non-residential building work put in place was $5.2b, up 6.3 per cent from a year earlier, with commercial building up 15.5 per cent.
For all building work put in place, the seasonally adjusted volume fell 2.1 per cent in the September quarter, the third successive fall.
For the year ended September, the unadjusted value of all building work put in place was $13.2b, up 0.1 per cent from the previous September year.