Signs of an increasing pipeline of work in Auckland's construction industry late last year signal more sustained economic growth ahead for the region.

Residential construction activity has been flat and at a low level throughout the region since the latter part of 2008, says Geoff Cooper, Auckland Council's chief economist.

The number of residential consents rose 5 per cent in the three months ended September 30 from the previous quarter, and 27 per cent on the year-earlier period, according to Statistics New Zealand data included in its second Auckland Economic Quarterly, released today. Economic activity in the construction sector rose 3.6 per cent in the same period.

"After a long period of sluggish activity, the construction sector is showing signs of awakening and that's likely to lead to stronger growth for Auckland's economy as we progress through 2013," said Mr Cooper.

"Residential consents are an important lead indicator of economic activity. This bodes well not just for construction activity, but for the various industries which support construction, such as manufacturing, engineering and financial services.

"For every dollar of activity in the construction sector, $1.60 is generated for other parts of the economy - so it is an important sector for the economy."

Volumes of building and resource consents lodged with Auckland Council are increasing. The council received a 5 per cent greater number of resource consent applications in the September quarter, compared with the year-earlier period. Applications for all building consents were 8 per cent higher over the same time.

Signs of greater construction activity come amidst rising Auckland house prices, steady population growth, limited supply of new construction over recent years, and moderate economic growth.

While all signs point to a soft September quarter for the wider Auckland economy, business confidence indicators are up and suggest more sustained economic activity is around the corner. This should eventually filter through to the labour market, where unemployment remains stubbornly high at 8.6 per cent. 

Confidence indicators remain in positive territory. Westpac's regional consumer confidence survey remains in positive territory while NZIER's Quarterly Survey of Business Opinion shows business confidence is up.

Read Auckland Council's second Auckland Economic Quarterly (387kb), subscribe to future editions, or find out more about Auckland's economic strategy.