Hamilton City Quarterly economic monitor - June 2019

Overview

Indicator Hamilton City Waikato Region New Zealand
Annual average % change
Gross domestic product
2.6%
2.7%
2.5%
Traffic flow
-0.8%
1.5%
1.5%
Health Enrolments
4.8%
3.0%
1.8%
Consumer spending
1.9%
5.2%
4.0%
Residential consents
35.8%
15.0%
5.8%
Non-residential consents
-8.1%
17.6%
7.9%
House prices*
-2.6%
3.1%
1.4%
House sales
2.5%
4.4%
-0.9%
Guest nights
5.9%
2.8%
1.3%
Tourism expenditure
-1.0%
5.5%
3.2%
Car registrations
-5.2%
-5.9%
-8.6%
Commercial vehicle registrations
-3.0%
0.3%
0.3%
Jobseeker Support recipients
9.2%
11.2%
9.6%
Level
Unemployment rate
4.3%
3.6%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Hamilton City

Provisional estimates from Infometrics show that the Hamilton City economy expanded by 2.6% over the 12 months to June 2019. Although Hamilton’s economy continues to be supported by strong population growth and residential construction activity, traffic flows fell 0.8% over the June 2019 year, pointing towards softer economic growth going forward.

Hamilton’s current growth is underpinned by continued growth in the local population. Health enrolments, (our proxy for local population growth) increased 4.9% over the June 2019 year – the second highest growth across the country.

Heightened construction activity remains due to the strength of the population growth, with Hamilton City having the 9th highest growth in residential consents lodged over the June 2019 year. Residential consents were 36% higher over the June 2019 year, with 397 consents in the last quarter alone – significantly higher than the 10-year average of 244 consents.

Households in Hamilton remain willing to spend but are getting more cautious. Consumer spending data from Marketview showing a 1.9% increase over the June 2019 year, below the national average of 4.0%. This more cautious spending behaviour is reinforced by the 5.2% decline in car registrations over the period, as households watch their spending more closely.

Household spending continues to support local businesses and keep people employed, with the unemployment rate for Hamilton City falling to 4.3% over the June 2019 year. Although Jobseeker Support recipients continue to grow in Hamilton, up 9.2% over the June 2019 year, growth in recipients is higher nationally, and is driven by greater accessibility for income support rather than a downturn in the labour market.

Tourism activity remains mixed, with guest nights increasing 5.9%pa but tourism spending falling 1.0% over the same period. With guest nights likely to be underreporting guest activity due to the lack of focus on private accommodation, it appears Hamilton is increasingly becoming an area for visitors to base themselves when visiting the Waikato region.

Overview of national economy

The New Zealand economy continues to perform well, but concerns are growing about the future, with a long, slow, slowdown expected over the next few years. The Reserve Bank’s aggressive cut to the official cash rate (OCR) to 1.00% reflects a deteriorating economic outlook as both business and government investment remains poor, inflation remains low, and the employment outlook softens. With slowing population growth expected to eventuate before the end of the year, the focus turns to consumer spending and whether it can prop up economic growth, or if it too succumbs to global and domestic uncertainty.