Hamilton City Quarterly economic monitor - March 2019

Overview

Indicator Hamilton City Waikato Region New Zealand
Annual average % change
Gross domestic product
3.1%
2.8%
2.5%
Traffic flow
0.1%
1.4%
0.6%
Health Enrolments
3.6%
2.2%
1.7%
Consumer spending
2.8%
5.1%
4.1%
Residential consents
40.0%
12.6%
10.0%
Non-residential consents
4.0%
21.4%
7.6%
House prices*
-0.6%
4.6%
1.3%
House sales
-1.9%
2.6%
1.6%
Guest nights
3.3%
0.8%
0.6%
Tourism expenditure
1.5%
5.7%
3.3%
Car registrations
-3.1%
-4.0%
-7.6%
Commercial vehicle registrations
3.3%
2.7%
-0.07%
Jobseeker Support recipients
8.9%
10.3%
7.6%
Level
Unemployment rate
4.5%
3.8%
4.3%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Hamilton City

Hamilton’s economy continues to grow at a faster pace than the national average, with a growing population and sustained strength in construction driving this growth. Provisional estimates from Infometrics show the local economy grew by 3.1% over the 12 months to March 2019.

Health enrolments, a broad proxy for population growth, grew 3.6% over the March 2019 year. This larger population helped to push consumer spending up 2.8% over the period, although this growth in spending is slower than recent quarters. Households may be becoming less optimistic about the future. Higher fuel prices also contributed to a 3.1% fall in passenger vehicle registrations, although this fall was more moderate than the New Zealand average drop of 7.6%.

A growing population helped to fuel construction growth, with residential consents in Hamilton rising 40% over the last 12 months. Hamilton’s growth was stronger than the 10% growth throughout New Zealand. Strong construction activity supported the 3.3% growth in commercial vehicle registrations in Hamilton, which bucked the national trend of a 0.1% fall.

The labour market in Hamilton remains tight, with unemployment falling to 4.5% in the 12 months to March 2019, the lowest rate in a decade. Hamilton’s unemployment rate continues to close the gap with the national average, with the gap closing to 0.3 percentage points. However, Jobseeker Support recipients continue to grow, up 8.9% over the March 2019 year, above the New Zealand-wide growth of 7.6%. This rise was probably driven more by the easing of conditions under which a person can receive a benefit than actual labour market conditions.

Tourism in Hamilton continues to grow, although growth has slowed in recent months amid a softer national tourism outlook and falling Chinese tourist arrivals. Guest nights in Hamilton rose 3.3%, faster than the 0.8% growth for the wider Waikato region. Domestic visitors have driven growth in Waikato region, up 5.4% over the last year, while international visitors fell 6.6% over the same period. Overall tourism spending was up by 1.5% over the April 2019 year.

Overview of national economy

The economy remains in a holding pattern, with uncertainty increasing the risk of economic paralysis. Global concerns continue to circle, with Brexit, a European slowdown, and the US-China trade war all issues that threaten New Zealand’s export outlook. The Reserve Bank has cut the official cash rate (OCR) to 1.5% in the face of poor business investment, global concerns, and subdued inflation. This leaves the Bank with little ammunition to combat a future unexpected shock. Government spending growth remains slow, restricting the impact of any additional fiscal stimulus. Construction appears to be a bright spot on our outlook, but the labour market presents a more mixed picture, with low unemployment but slowing employment growth.