Marlborough Region Quarterly economic monitor - June 2019

Overview

Indicator Marlborough Region New Zealand
Annual average % change
Gross domestic product
2.1%
2.5%
Traffic flow
3.5%
1.5%
Health Enrolments
2.1%
1.8%
Consumer spending
4.1%
4.0%
Residential consents
-25.0%
5.8%
Non-residential consents
55.3%
7.9%
House prices*
6.6%
1.4%
House sales
2.6%
-0.9%
Guest nights
-3.6%
1.3%
Tourism expenditure
1.1%
3.2%
Car registrations
-4.6%
-8.6%
Commercial vehicle registrations
1.7%
0.3%
Jobseeker Support recipients
12.6%
9.6%
Level
Unemployment rate
3.4%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Marlborough Region

The Marlborough economy continues to grow at a moderate rate. Infometrics’ provisional estimates show GDP expanding by 2.1% in the 12 months to June 2019, slightly below the national average of 2.5%. Growth in traffic volumes of 3.5% shows strength in the underlying economic activity.

Marlborough has experienced a few years of strong population growth. Health enrolments, which are a proxy for population growth, rose by 2.1% in Marlborough in the June year, indicating that the population is continuing to grow strongly.

A growing population has been driving demand for housing which has in turn been fuelling house price growth. Marlborough house values grew by 6.6% and reached an average of $477,000 in the 12 months to June 2019, considerably lower than the national average of $687,000. Despite the growth in prices, housing is more affordable in Marlborough than in the period just before the global financial crisis.

Although the number of residential consents were down to 249 for the year to June, off a peak of 332 a year ago, housing consents are still at a level well above the 10-year average of 230. Non-residential building has reached a level last seen in the construction boom of the late 2000s. The total value of non-residential consents reached $55million, up 55% on the previous year.

The tourism boom has contributed to Marlborough’s growth over the past few years but there are signs that the days of heady growth are over. Total tourist spending increased by only 1.1%, lower than national growth of 3.2%, and guest nights in commercial accommodation declined by 3.6%. The picture would likely be more positive if we were able to include private accommodation.

Marlborough’s unemployment rate averaged 3.4% in the 12 months to June, well below the national average of 4.1%. Despite the tight labour market, the number of Jobseeker recipients increased to 916 on average over the year to June 2019, up by about 100 on the previous year. We are not reading too much into this increase as we understand it to be a consequence of a softer approach towards benefit recipients nationally. The number of Jobseeker Support recipients grew 9.6% nationally at the same time as the unemployment rate has reached record lows.

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.