Horowhenua District Quarterly economic monitor - December 2019

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Overview

Indicator Horowhenua District Manawatu-Wanganui Region New Zealand
Annual average % change
Gross domestic product
3.1%
2.4%
2.3%
Traffic flow
2.0%
1.3%
1.7%
Health Enrolments
3.0%
3.5%
2.3%
Consumer spending
5.2%
4.4%
3.3%
Residential consents
-2.1%
-2.2%
13.8%
Non-residential consents
172%
-18.6%
5.2%
House prices*
17.8%
17.8%
3.6%
House sales
-10.4%
-6.3%
-1.0%
Tourism expenditure
-0.8%
1.1%
3.5%
Car registrations
-8.2%
-4.0%
-8.6%
Commercial vehicle registrations
-11.2%
2.7%
-6.9%
Jobseeker Support recipients
7.3%
6.4%
10.6%
Level
Unemployment rate
6.3%
5.2%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Horowhenua District

The Horowhenua economy continues to outstrip growth in the national economy. Our provisional estimate of GDP growth for the 2019 calendar year was 3.2%, well ahead of national growth of 2.3%. Traffic growth, a broad measure of economic activity, was sitting at 2%.

Consumer spending growth in Horowhenua (5.2%) remains well above the national growth rate (3.3%). Growth has been aided by strong employment growth in the district. According to the 2019 Regional Economic Profile Horowhenua District added nearly 300 jobs over the year. The biggest contributors to growth were construction (68 new jobs), wholesale trade (45) and Public Administration and Safety (45).

Spending growth has also been supported by a strong primary sector, with an additional $16m expected from the 19/20 dairy pay-out in Horowhenua this season. Meat prices in 2019 also held at high levels.

Population growth in Horowhenua has exceeded national growth for four successive years. Health enrolments in the district grew by 3% in the year to December 2019, suggesting the population continues to grow strongly.

Horowhenua’s construction industry is going to be stretched following two very large non-residential consents being issued in the final quarter of the year. The total value of non-residential consents over the year was more than double the 10-year average.

Strong growth in demand for houses, and a lack of supply, have pushed the average house value up by 18% over the calendar year. The average house value is now nearly $390,000 and housing affordability has been steadily declining despite falling interest rates.

Horowhenua’s unemployment rate has been slowly tracking down but at 6.3% remains well above the national average of 4.1%. The number of Job Seeker Support recipients averaged nearly 1,600 over the calendar year, up from about 1,500 the previous year. This reflects an easing of conditions under which a person can receive the benefit.

Overview of national economy

The economy looks to have turned a corner, at least temporarily, at the end of 2019. Although growth has slowed, some near-term indicators have shown an improvement. Traffic flows, tourism spending, and house prices have all shown renewed growth, and are set to provide a foundation for further growth in 2020. Government spending activity over the medium term also looks to support economic growth, but there remains little in the way of fundamental growth drivers over the next five years. With economic growth shifting down a gear in recent years, headline growth is likely to settle at a softer level. However, a significant risk to growth in 2020 is presented by the COVID-19 outbreak, which will restrain tourism and export activity, and could threaten consumer and business activity if the outbreak continues or spreads to New Zealand.