Dunedin City Quarterly economic monitor - September 2018

Overview

Indicator Dunedin City Otago Region New Zealand
Annual average % change
Gross domestic product
2.7%
3.9%
2.9%
Traffic flow
4.0%
4.9%
3.9%
Residential consents
-10%
-6.2%
5.4%
Non-residential consents
-41%
-17%
4.9%
House prices*
11%
0.5%
8.4%
House sales
0.3%
-2.9%
-0.6%
Guest nights
3.0%
3.6%
2.7%
Retail trade
5.6%
7.3%
4.8%
Car registrations
-0.3%
1.1%
-1.7%
Commercial vehicle registrations
9.1%
11%
2.3%
Jobseeker Support recipients
-4.8%
-3.6%
2.2%
Tourism expenditure
7.8%
12%
8.2%
Level
Unemployment rate
6.7%
4.1%
4.3%
International net migration
899
1,978
62,735
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Dunedin City

Dunedin’s economy is estimated to have grown by 2.7% over the September year, according to Infometrics’ provisional estimate of GDP. Economic growth in Dunedin has now remained above 2%pa for four straight years. Indicators of employment and retail spending remain particularly strong. Over the past year there was a 4.0% increase in traffic flows in Dunedin.

Improving economic conditions are flowing through into labour market outcomes. The average number of people receiving Jobseeker Support declined 4.8% over the September year. This outcome is consistent with Business Demography data from Statistics New Zealand that showed employment within Dunedin businesses (ie excluding self-employment) climbed 3.9% over the February 2018 year – its fastest rate of growth since 2002. These trends are echoed region-wide. Almost half of Otago businesses in in the September quarter reported increased difficulty in finding skilled or specialist staff than three months ago, while ANZ job ads data showed robust growth in job openings across the region over the same period.

Given these strong employment prospects, population growth in Dunedin has picked up. Recently released population estimates show Dunedin’s population increased by 1,900 to 130,700 over the June 2018 year, following growth of 1,800 people the previous year.

Against a backdrop of population and employment growth, retail spending continues to expand rapidly. Data from Marketview shows that retail purchases on electronic cards in the September 2018 quarter totalled $363m, up $19m from a year ago. Over the past year retail spending in Dunedin has grown 5.6%, following on from 3.8%pa growth the previous year.

At first brush, the fall in residential consents might look unsettling, but should be put in perspective, with the number of new dwelling consents remaining 15% above long-term averages. Likewise, those in the commercial construction sector will also be unphased by the tapering of non-residential consents. Not only will the large volume of commercial work consented last year still be keeping builders busy, but the looming Dunedin Hospital rebuild will put long-term pressure on capacity within the sector.

Overview of national economy

We’ve revised up our forecasts of economic growth. It’s not a big change – our growth projection for the year to June 2019 has lifted from 2.7% to 2.9%. But it’s an upward revision and so is at odds with the air of despair being generated by negative business and consumer confidence surveys. Better economic growth in the near term is largely about government spending. Aside from government spending, the other major upward revision is the export outlook. Export prices are at their highest level since 2014 in NZ dollar terms.