By Paul McBeth
If you hadn't already guessed, the only thing propping up the economy is the prospect that a whole lot of people are going to start building things in Canterbury very soon.
Official figures this week showed the economy grew 0.2 percent in the September quarter, half what pointy-headed economists were picking, but pretty much in line with the dour forecasts of the Reserve Bank.
Of course, that's all rear-view mirror stuff and shouldn't really worry those forward-looking pundits looking to jump on the next investment wave. And what the figures are telling us, is that it isn't going to be agriculture.
We had a rip-snorter of a season last year, which meant our farmers could flood the market with a glut of white gold and offset that pesky kiwi dollar that won't stop rising.
This year's numbers pale in comparison, and barring a repeat in stupidly good growing conditions, it will keep a lid on future gains in the primary sector.
That leaves the construction sector as the shiniest hook to hang your hat on when you go looking for a buck.
Darren Gibbs, chief economist at Deutsche Bank NZ, reckons construction is going to make up about half of New Zealand's economic growth next year.
That might not sound like much, but think on this. Construction accounted for just 4.2 percent of the economy, or $6.06 billion, in the year ended Sept. 30.
The reason it helps kickstart things is that building sites need stuff to build things with. That's a godsend for manufacturers, who make up about 13 percent of GDP, as they will finally have ready and willing local buyers.
The Reserve Bank reckons the rebuild is going to cost in excess of $30 billion, though the final bill is anyone's guess. And that's got economists feeling a little easier when they peer into the future.
Deutsche's Gibbs says “from here, we really rely on the Christchurch rebuild to continue, and to be fair the anecdotes are good – things are definitely gearing up.”
It's also what the government has been hanging its growth forecasts on. Once the rebuild gets underway, a flood of cash will help employ people, and hopefully spur a bit of wage growth around the country when it gets harder for your local chippie to stay away from Canterbury's gold.
Needless to say, it's got the investment community interested too.
NZX supremo Fletcher Building has been well-loved this year, with the stock gaining 35 percent to $8.44 so far this year. Putting that in perspective, Fletcher has beaten the NZX 50 benchmark index's 22 percent gain this year.
Added to that, Fletcher has dividend yield of 5.12 percent, marginally better than a term deposit, which is probably what you'd expect from one of the big boys at the top of the bourse.
That's not to say things have been rosy for the company this year. It's got a new boss in place and has been tinkering with its structure as it tries to sort out its steel business.
What people like is that Fletcher has a massive exposure to Christchurch. It got a plum gig with the Canterbury Earthquake Recovery Authority, doing all the small jobs for the government agency before the major construction kicks in, and will have a lead role in that too.
And Fletcher isn't alone among construction stocks that are getting a bit more love from investors.
In fact, out of the grab-bag of six stocks I looked at with exposure to construction, including Cavalier Corp, Steel & Tube Holdings, Methven and Opus International, only Nuplex Industries, which manufactures industrial resins, wasn't rated 'outperform'.
And it's not just the Canterbury rebuild set to kick off in earnest next year, but also an Auckland property market that's looking like it wants to pop, meaning there's going to be even more pressure put on the country's building sector.
So when the likes of Steel & Tube, Methven, Opus and Nuplex have dividend yields of at least 6.8 percent, the prospect of a booming construction sector means there are real opportunities to be had.
The government's banking on construction next year. Are you?