Hamilton City Quarterly economic monitor - June 2018

Overview

Indicator Hamilton City Waikato Region New Zealand
Annual average % change
Gross domestic product
2.0%
2.6%
2.7%
Traffic flow
3.0%
3.6%
3.1%
Residential consents
-1.8%
-1.8%
7.9%
Non-residential consents
36%
36%
10%
House prices*
3.4%
3.2%
4.9%
House sales
-10%
-11%
-7.0%
Guest nights
-2.7%
1.1%
2.4%
Retail trade
4.0%
5.2%
4.4%
Car registrations
5.4%
3.7%
1.1%
Commercial vehicle registrations
13%
8.0%
5.4%
Jobseeker Support recipients
3.0%
1.9%
0.05%
Tourism expenditure
6.6%
6.0%
8.5%
Level
Unemployment rate
5.3%
4.4%
4.5%
International net migration
1,829
3,072
64,996
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Hamilton City

The Hamilton economy grew 2.0% over the 12 months to June – below average for both the Waikato region and the national economy. There are two reasons behind this disparity. Hamilton City has expended quickly over the past five years meaning that marginal percentage gains are more difficult to achieve. Secondly, national economic growth has been driven up mostly by sharp commodity price increases over the past year, benefitting growth results for more provincial areas rather than cities.

Many indicators we see for the Hamilton economy point still towards sturdy economic growth in the area. Annual retail sales were up 4.0%pa in June, climbing from the 3.5% growth seen in late 2017. Both car and commercial vehicle sales are increasing at an above-average pace, indicating that both households and businesses in Hamilton are still comfortable spending in the area.

Furthermore, non-residential consents were up 36% over the 12 months to June 2018. Although a good chunk of this growth was driven by hospital buildings, office and warehouse consents also climbed, indicating that businesses still have confidence in the local economy to keep expanding.

The long-term strength of the Hamilton economy has also attracted people in from outside the area. But strong population growth has put upward pressure on house prices, with houses selling for more than a million dollars becoming more common.

New government policies are set to have both positive and negative effects on the education sector and spending in Hamilton City going forward. Rule changes curbing international students’ right to work in New Zealand after study are likely to put a dent in the number of international students and related revenue coming through for tertiary education institutions. At the other end of the spectrum, primary school teacher pay negotiations will give teacher pay packets a boost, feeding into higher spending in the local economy.

Overview of national economy

Most of the New Zealand economy’s momentum over the next 18 months will come from provincial areas, thanks to strong export incomes. Low business confidence suggests that domestically focused firms are already reluctant to invest or hire. Households are also becoming more cautious about their spending in the face of higher fuel prices and the slowing housing market. The New Zealand economy needs the continuation of good export conditions to maintain a solid growth performance.