Regional Trends
May 2010
A gusher in the ’Naki
Quarterly percentage change
Twelve of the fourteen regions recorded a rise in economic activity in the March
quarter. Regions in the central and lower part of the North Island recorded the
largest quarterly increases, with Taranaki and Manawatu-Whanganui posting the strongest
gains. The only regions to record declines in economic activity in the first three
months of the year were Otago and Gisborne - two economies that have recorded consecutive
positive gains over the preceding nine months.
On a nationwide basis, our composite index of economic activity increased 0.9 percent
in the March quarter. The North Island posted a 1.0 percent rise in economic activity,
while the South Island recorded a 0.4 percent lift. This is the fourth consecutive
quarterly rise in nationwide economic activity. On a regional basis, three economies
have also recorded four successive quarterly rises: Auckland, Hawke's Bay and Canterbury.
Year-on-year growth
Nationwide year-on-year economic growth returned to a positive figure (albeit only
+0.1 percent) for the first time since September 2008. The North Island economy
grew by 0.3 percent in the twelve months to March, but the South Island economy
was still 0.5 percent below where it was a year earlier.
All of the regions recorded an improved annual rate of economic growth in March,
compared to three months earlier. The number of regions recording positive annual
growth versus negative annual growth was evenly split. At 1.7 percent, Gisborne's
rate of economic growth in the twelve months to March was the strongest across the
regions. At the other extreme, Nelson-Marlborough and Southland jointly recorded
the largest contraction in economic activity, decreasing 1.3 percent from a year
earlier.
March quarter at a glance
- Retail interest rates remained unchanged over most
of the yield curve, with longer-term mortgage rates easing a little.
- The exchange rate had mixed moves versus our main trading
partners. On a trade-weighted basis it appreciated slightly.
- Commodity prices continued to move higher.
- Business confidence nudged higher in most regions.
Taranaki retained the highest level of confidence, while sentiment slipped the greatest
in Southland.
- Consumer confidence eased in all but two regions. The
largest fall and the lowest level of confidence was measured in Southland.
- Retail sales inched up nationally, with the largest
regional rise measured in Southland.
- House sales weakened across the entire country with
the largest falls measured in West Coast and Hawke’s Bay.
- Dwelling approvals recorded a modest increase over
several regions. The West Coast recorded the largest gain, while Otago recorded
the largest fall.
- Commercial building permits were virtually unchanged
(down 0.3 percent) in the March quarter. Otago and Southland recorded the largest
falls, while Manawatu-Whanganui rebounded from a weaker December quarter.\
- Employment grew in most of the regions. For the second
successive quarter Otago topped the regional growth stakes.
- The unemployment rate improved in most regions. The
lowest unemployment rate was measured in Southland.
Northland
Economic activity lifted for the third sucessive quarter, despite drought conditions
setting in over the start of the year. Business confidence pushed ahead of the nationwide
benchmark to hit a 16-year high. Meanwhile, consumer confidence mirrored a nationwide
easing and slipped to a nine-month low. Retail sales slumped 4.2 percent in March
– the largest quarterly fall across the regions. The number of commercial building
permits issued slipped 8 percent, contrasting a virtually unchanged national figure,
while the equivalent figure for residential building work posted a 3.3 percent increase
(+1.9 percent nationwide). Employment rose 0.6 percent but this increase was weaker
than the 1.0 percent increase measured nationally.
Auckland
Auckland was one of only three regions to post its fourth consecutive quarterly
increase in economic activity. A 1.4 percent surge in employment in the region,
helped boost Auckland’s surveyed level of consumer confidence to a nationwide high.
Furthermore, business confidence exceeded the nationwide benchmark, lifting to an
11-year high. The number of house sales fell 14 percent in March, mirroring the
national rate of decline. The number of dwelling approvals issued in Auckland was
marginally ahead of the national rise (2.3 versus 1.9 percent, respectively) but
consents for commercial construction projects slipped 4.1 percent (which compares
with a 0.3 percent dip nationally). Retail sales rose 0.5 percent, while nationally
they the figure only lifted 0.2 percent.
Waikato
Economic prospects are picking up, but the rate of growth is below the pace measured
nationally. Waikato recorded the second highest level of business confidence in
March – the region’s best relative ranking since 1996. In addition, consumer confidence
lifted further, contrasting with an easing nationwide. The number of farm sales
increased by a third, while at the national level they fell 3 percent. Visitor guest
nights lifted 3.3 percent – the strongest increase across the regions. On a weaker
note, Waikato recorded a 13 percent fall in the number of commercial building permits
issued (-0.3 percent nationally) but residential dwelling approvals inched up 1.3
percent, but behind the 1.9 percent nationwide rise. Employment growth was flat,
in contrast to a strong lift nationally.
Bay of Plenty
Back-to-back gains in economic activity has propelled annual economic growth ahead
of the national benchmark. The Bay recorded reasonable rises across a range of economic
indicators. There was a 1 percent rise in sales of lifestyle blocks, contrasting
with a 21 percent fall nationally. Accommodation guest nights rose faster than the
national average, with the region’s occupancy rate recording a 3.3 percent rise.
The number of houses sold in the Bay slipped 14 percent, identical to the national
drop. Both business and consumer confidence were marginally weaker than the respective
panoptic measures. Employment only grew 0.3 percent, while the national figure lifted
1.1 percent. The number of dwelling approvals issued rose at the same rate as the
nation (up 2 percent), but commercial building consents eased 1.2 percent (-0.3
percent nationally).
Gisborne
Despite a quarterly drop in economic activity, Gisborne retained the prime position
on the table of annual economic growth. The value of retail sales lifted 1.9 percent
from three months earlier. House sales followed the nationwide trend down, but Gisborne
recorded the smallest relative rate of decline, easing only 3.3 percent in the three
months to March and ahead of the 14 percent fall recorded nationally. However, rural
real estate statistics were weaker than the national yardstick. There was only one
farm sold in the first three months of the year and 6 lifestyle blocks sold, which
is the smallest quarterly number of rural sales since the start of our series in
1997. The number of commercial building permits increased 19 percent but residential
dwelling approvals slipped 2 percent.
Hawke’s Bay
Hawke’s Bay began the year with a strong lift in economic activity. The Bay recorded
a 9 percent rise in rural real estate sales, at a time when the national figure
fell 17 percent. This was underpinned by a 21 percent lift in the number of lifestyle
blocks sold (-21 percent nationally). Accommodation guest nights recorded the second
largest rise across the regions, lifting 2.7 percent. Residential real estate sales
fell by 23 percent (-14 percent nationally), taking the series down to its lowest
level since December 2008. There was an 11 percent increase in the number of commercial
building permits issued in the region, lifting the series to a 12-month high. Employment
in the region grew 1.1 percent in the quarter, on a par with the nationwide increase.
Taranaki
Taranki’s surge in economic activity was of epic proportions and has not been matched
since 1975. The region recorded the highest level of business confidence across
NZ. The previous time that any individual region was as confident was eleven years
ago. Employment grew 2.2 percent in Taranaki, twice the national rate of increase.
The number of commercial building permits issued in Taranaki rose 20 percent to
its highest level since December 2008. Residential building approvals also lifted
10 percent, while the nationwide figure only rose 2 percent. On the other side of
the ledger, retail sales and accommodation guest nights both fell faster than the
nationwide benchmarks, dropping 3.3 and 6.5 percent, respectively.
Manawatu-Whanganui
Following a weak December outturn, a strong rebound in economic activity was measured
in Manawatu-Whanganui. The region recorded the strongest rise in commercial building
permits issued, lifting 24 percent from the end of last year, reaching its highest
level since June 2008. The number of residential dwelling approvals also rose 11
percent, overshadowing a 2 percent rise nationwide. New car registration increased
21 percent (three times faster than the national increase) to its highest level
since December 2008. Rural real estate sales were buoyed by a 37 percent increase
in the number of large farms sold in the quarter. Retail sales grew 0.9 percent
in the March quarter, considerably stronger than the 0.2 percent increase measured
nationally.
Wellington
Despite the latest six month growth spurt, the year-on-year rate of increase in
Wellington’s economy has slipped below the nationwide pace. Both businesses and
households recorded relatively high levels of economic confidence in March. Employment
in the region grew 2.0 percent in the first three months of the year, twice the
1.0 percent rate of increase measured nationally. Building permits for commercial
projects increased 8 percent, while residential permits rose 2.2 percent – respective
nationwide figures recorded movements of -0.3 and 1.9 percent, respectively. New
motor vehicle registrations issued in Wellington picked up in March, more so for
commercial vehicles which lifted 27 percent (compared to only a 5 percent rise nationally).
Nelson-Marlborough
A third successive rise in economic activity has finally turned the downward drift
in annual economic activity. Nelson-Marlborough recorded large increases in both
types of building permits, rising 8 and 10 percent respectively for dwellings and
commercial projects. Employment in the region lifted 0.8 percent to a nine-month
high. New car registrations posted a 15 percent increase (twice the national rate
of increase) to an 18-month high, but commercial motor vehicle registrations slipped
12 percent to a new low. Retail sales in the region grew 1.2 percent from three
months earlier – nationally the increase was only 0.2 percent.
West Coast
Year-on-year economic growth in the region was on a par with the national economy
(up 0.1 percent). The West Coast recorded a 20 percent rebound in the number of
dwelling approvals issued, lifting the series to its highest level since June 2008.
Commercial building permits only edged up 2 percent but this compares to a nationwide
figure that was unchanged. The number of new cars registered in the region rose
to its highest level since December 2008. There were five farms sold in the March
quarter, which represents the highest quarterly total since June 2009. Residential
house sales dropped by 38 percent, sinking to a new low of just 71 sales in the
three months to March.
Canterbury
Canterbury was one of three regions to record four straight quarters of economic
growth. Business confidence in Canterbury remained above the nationwide benchmark,
but the level slipped to the fourth highest ranked position across the regions.
Consumer confidence inched up in March, at a time when most other regions recorded
a weakening in confidence. Rural real estate sales dropped 17 percent, reflecting
a drop in lifestyle blocks, but the number of large farm sales increased by 12 percent.
Residential and commercial building permits posted very small rises but both were
marginally ahead of the nationwide rate of growth. Employment only grew 0.3 percent,
while the national figure rose 1.0 percent.
Otago
Otago recorded the largest quarterly drop in economic activity. But it comes after
three solid quarterly increases, meaning year-on-year growth remains above the national
track. The region recorded an 6.2 percent surge in employment in March but, as this
coincided with an equally large rise in the working age population, the region’s
unemployment rate increased to 6.3 percent. Otago recorded the largest weakening
in building approvals in the March quarter, slipping 7.1 percent from the level
recorded in December. The drop in the number of commercial building permits issued
was even greater, falling 16 percent from the preceding quarter. Consumer confidence
was the second lowest across the country. Retail sales dropped 0.6 percent, in contrast
to a small rise nationally.
Southland
A strong quarterly gain in economic activity in Southland has arrested a two year
period of weakening annual economic growth. Despite recording the lowest levels
of both business and consumer confidence across the regions, Southland posted its
largest quarterly gain in economic activity since September 2006. Retail sales jumped
3.6 percent in the three months to March, easily beating the rest of New Zealand
which only lifted 0.2 percent. Employment grew 2.0 percent, twice the nationwide
rate of increase. The average days to sell a house narrowed, contrasting with a
lengthening across the rest of New Zealand. Nevertheless, Southland recorded weaker
number of house sales, accommodation guest nights and commercial building permits
issued relative to the previous quarter.
The tables can be viewed as charts on our
Regional Trends charts page.
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