Horowhenua District Quarterly economic monitor - June 2019

Overview

Indicator Horowhenua District Manawatu-Wanganui Region New Zealand
Annual average % change
Gross domestic product
2.8%
2.7%
2.5%
Traffic flow
2.3%
1.5%
1.5%
Health Enrolments
2.7%
2.8%
1.8%
Consumer spending
8.3%
6.3%
4.0%
Residential consents
25.6%
11.1%
5.8%
Non-residential consents
19.8%
-10.3%
7.9%
House prices*
14.8%
15.0%
1.4%
House sales
-5.5%
-3.6%
-0.9%
Guest nights
17.3%
5.8%
1.3%
Tourism expenditure
2.2%
4.2%
3.2%
Car registrations
-0.4%
-1.8%
-8.6%
Commercial vehicle registrations
-2.3%
13.5%
0.3%
Jobseeker Support recipients
2.4%
5.1%
9.6%
Level
Unemployment rate
6.8%
5.2%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Horowhenua District

Horowhenua’s economy continues to grow faster than the national economy. Infometrics’ provisional estimates show that the local economy expanded by 2.8% in the 12 months to June 2019. Growth in traffic flows of 2.3% in Horowhenua support our view of strong underlying economic activity.

Over the past few years Horowhenua’s population growth has jumped to record levels. Health enrolments, a broad indicator of population growth, increased by 2.7% in the 12 months to June 2019, which suggests that the population continues to grow strongly.

Population growth is driving demand for housing and pushing up house prices in Horowhenua. Average house values increased by 15% over the year, reducing affordability to a level below the trough experienced prior to the global financial crisis.

Residential construction has responded to the strong demand for housing. More than 300 residential consents were issued in the 12 months to June which is more than double the 10-year average of 135.

The value of non-residential consents jumped to above $12m in the year to June, almost 20% higher than the previous year. Business confidence will have been boosted by the announcement that a 13-hectare plot of unused industrial land is set to become a business park.

Dairy farmers in Horowhenua are expected to earn $108m for the 2018/19 season, a small drop of $3m from the season prior due to downward revisions of the farmgate milk price throughout the season. Fonterra has indicated a broad range for the 2019/20 season pay-out, and current conditions point towards the pay-out being closer to the top of the $6.25-$7.25/kgms range.

Horowhenua’s unemployment rate has dropped to 6.8% which is close to the 10-year low. Despite the strength of the job market the number of Jobseeker Support recipients in Horowhenua grew by 2.4% in the June year. The increase is largely due to softening of benefit eligibility and sanction policies rather than actual labour market conditions. Significantly, the rate of increase in Horowhenua was much lower than growth in the national economy (9.6%).

Overview of national economy

The New Zealand economy continues to perform well, but concerns are growing about the future, with a long, slow, slowdown expected over the next few years. The Reserve Bank’s aggressive cut to the official cash rate (OCR) to 1.00% reflects a deteriorating economic outlook as both business and government investment remains poor, inflation remains low, and the employment outlook softens. With slowing population growth expected to eventuate before the end of the year, the focus turns to consumer spending and whether it can prop up economic growth, or if it too succumbs to global and domestic uncertainty.