Marlborough Region Quarterly economic monitor - December 2019

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Overview

Indicator Marlborough Region New Zealand
Annual average % change
Gross domestic product
2.0%
2.3%
Traffic flow
2.0%
1.7%
Health Enrolments
3.4%
2.3%
Consumer spending
2.8%
3.3%
Residential consents
7.0%
13.8%
Non-residential consents
13.7%
5.2%
House prices*
6.4%
3.6%
House sales
-6.2%
-1.0%
Tourism expenditure
1.1%
3.5%
Car registrations
0%
-8.6%
Commercial vehicle registrations
-11.1%
-6.9%
Jobseeker Support recipients
9.9%
10.6%
Level
Unemployment rate
2.9%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Marlborough Region

Growth in Marlborough’s economy slowed somewhat in the year to December 2019, with Infometrics estimate of provisional GDP growth for the year being 2.1%, as compared to the 2.3% for the national economy. Consumer spending grew by 2.8% and tourism expenditure by 1.1% during the year to December 2019, as compared to national growth levels of 3.3% and 3.5% respectively.

Marlborough’s labour market remains particularly tight, with average unemployment in the year to December 2019 of 2.9%, below the rate of 3.5% recorded for the year to December 2018.

House prices increased by 6.4%, above the national figure of 3.6%. The volume of housing sale transactions declined by 6.2% from the December 2018 year, pointing to ongoing tightness in the local housing market.

In response, residential construction activity in Marlborough increased during the year, with the number of residential consents granted in the December 2019 year growing by 7% over the corresponding period in 2018. Furthermore, the number of residential consents issued in the December 2019 quarter increased by 56% from the September 2019 quarter.

The value of non-residential consents issued in 2019 increased by 13.7% from the previous year, well above the New Zealand-wide increase of 5.2%.

The annual average number of health enrolments in Marlborough in 2019 increased by 3.4% in the year to December 2019, as compared to a national increase 2.3%. The average number of Jobseeker Support recipients during the year increased by 9.9%, which compares favourably with a national increase of 10.6%. Both these increases broadly correlate with the upward revision of the region’s estimated population from 46,600 to 49,200, as of June 2019.

Growth prospects for the first half of 2020 remain uncertain, with the COVID-19 virus outbreak expected to reduce export demand in primary sectors such as forestry. Conversely, Marlborough’s low level of reliance on tourism from China means that the region should escape the worst effects of the major downturn in tourist arrivals from that market.

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.