Hamilton City Quarterly economic monitor - March 2020

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Overview

Indicator Hamilton City Waikato Region New Zealand
Annual average % change
Gross domestic product
1.9%
2.3%
1.7%
Traffic flow
-0.5%
-0.4%
-0.2%
Health Enrolments
4.1%
2.9%
2.5%
Consumer spending
0.9%
3.7%
3.0%
Residential consents
2.8%
7.2%
9.0%
Non-residential consents
-5.9%
9.1%
-0.4%
House prices*
6.0%
6.1%
5.9%
House sales
9.0%
1.8%
2.0%
Tourism expenditure
0.8%
2.4%
1.4%
Car registrations
-4.0%
-4.0%
-11.5%
Commercial vehicle registrations
-13.1%
-11.2%
-12.8%
Jobseeker Support recipients
9.4%
10.7%
11.7%
Level
Unemployment rate
4.9%
3.8%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Hamilton City

Hamilton’s economy performed solidly over the year to March 2020, with provisional GDP growth estimated at 1.9%, marginally above the 1.7% growth rate nationally. This provided the City with a solid economic base heading into the impending COVID-19 recession.

Population growth continued, with health enrolments (a proxy for population growth) increasing by 4.1%, compared to growth of 2.9% for the Waikato Region and 2.4% nationally. Consumer spending increased by 0.9% and tourism spending by 0.8%, as compared to New Zealand-wide growth of 3.0% and 1.4% respectively.

The housing market in Hamilton mirrored the national trends, with house prices growing by 6.0% over the March 2019 quarter. The volume of house sales grew by 9.0% over the year, well above the growth of 1.8% in the Waikato Region and 2.0% nationally.

In the construction sector, the number of residential consents issued increased by 2.8% over the year to March 2020, while the value of non-residential consents declined by 5.9%.

The unemployment rate remained higher than the national average at 4.9%, while the average number of Jobseeker Support recipients over the year increased by 9.4%, in line with a generally softer approach to benefit approvals nationally.

Declines in both passenger and commercial vehicle registrations suggest increasing uncertainty in the City’s economy during the quarter.

The economy will deteriorate markedly over the coming year, with Infometrics forecasting GDP to fall nationally by 8.0% and employment by 9.8% over the year to March 2021. Hamilton is expected to fare slightly better than the national average, due to its diverse economic composition and low reliance on international tourists. The City’s GDP is forecast to decline by 6.6% and employment by 8.1%. This will push unemployment up to 8.3%, a large increase but still below the national rate of 9.0%.

Overview of national economy

The COVID-19 pandemic has upended the economy and plunged New Zealand into the sharpest recession in living memory. The March quarter includes the full progression of the virus, from its origins in China and subsequent hit to New Zealand exports, through to border closures forcing lower tourism arrivals, before culminating in the lockdown of New Zealand under Alert Level 4. Our March 2020 Quarterly Economic Monitor only captures the initial economic effects of putting the New Zealand economy on life support. The June Monitor will better reflect activity changes. No sector of the economy will be spared, with the regional impacts dependant on the local economic structure – Infometrics is now forecasting the loss of 250,000 jobs nationally over the next year, followed by a long period of restructuring the economy.