Hamilton City Quarterly economic monitor - September 2018

Overview

Indicator Hamilton City Waikato Region New Zealand
Annual average % change
Gross domestic product
3.4%
3.5%
2.9%
Traffic flow
2.0%
3.3%
3.9%
Residential consents
11%
-2.2%
5.4%
Non-residential consents
17%
28%
4.9%
House prices*
6.8%
6.2%
8.4%
House sales
-2.0%
-1.4%
-0.6%
Guest nights
0.03%
2.4%
2.7%
Retail trade
4.4%
6.1%
4.8%
Car registrations
4.1%
3.0%
-1.7%
Commercial vehicle registrations
9.0%
5.7%
2.3%
Jobseeker Support recipients
5.1%
4.5%
2.2%
Tourism expenditure
7.4%
7.3%
8.2%
Level
Unemployment rate
5.2%
4.3%
4.3%
International net migration
1,887
2,897
62,735
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Hamilton City

Hamilton City’s economy grew 3.4%pa over the past 12 months, around the same rate as the Waikato Region, but above the NZ provisional estimate of 2.9%pa growth. This result is the first quarter where Hamilton City’s GDP growth has been above the NZ average in a year, signalling a pick up in the local economy.

Households appear more upbeat in Hamilton City, with higher retail spending recorded over the past 12 months. Marketview data shows spending in Hamilton City rose 4.4%pa, below the 6.1%pa recorded for the wider Waikato Region, but pulling closer to the 4.8%pa recorded NZ-wide. A stronger labour market is part of the reason behind this rise in spending, with unemployment in Hamilton City falling to 5.2%. Although Hamilton’s unemployment rate is above the Waikato and NZ averages (both 4.3%), the downwards trajectory indicates continued confidence in the local economy with more people able to access jobs.

However, not everyone is sharing in the wider gains in the Hamilton economy, with the number of Jobseekers rising 5.1%pa over the last 12 months. Hamilton is in the upper 20% of NZ areas for benefit growth, above both the Waikato (4.5%pa) and the NZ (2.2%pa) averages.

Tourism spending in Hamilton City advanced again this quarter, up 7.4%pa over the last 12 months – slightly ahead of the Waikato Region average but below the NZ average of 8.2%pa. Interestingly, tourism spending has grown strong even as commercial guest nights have remained relatively flat, up just 0.03%pa over the last 12 months. The discrepancy is likely to be due to a combination of increasing levels of private accommodation, via platforms such as Airbnb, as well as tourists spending more than previously in Hamilton.

Both residential and non-residential consents grew over the last 12 months, up 11%pa and 17%pa respectively – both above the NZ average. Lower demand to purchase existing homes in the near-term has pushed Hamilton house sales down 2.0%pa, a sharper fall than the 0.6%pa recorded NZ-wide.

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.