Thames-Coromandel District Quarterly economic monitor - March 2020

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Overview

Indicator Thames-Coromandel District Waikato Region New Zealand
Annual average % change
Gross domestic product
1.2%
2.3%
1.7%
Traffic flow
0.7%
-0.4%
-0.2%
Health Enrolments
1.4%
2.9%
2.5%
Consumer spending
7.5%
3.7%
3.0%
Residential consents
1.0%
7.2%
9.0%
Non-residential consents
4.1%
9.1%
-0.4%
House prices*
10.4%
6.1%
5.9%
House sales
-0.2%
1.8%
2.0%
Tourism expenditure
5.1%
2.4%
1.4%
Car registrations
-4.4%
-4.0%
-11.5%
Commercial vehicle registrations
-14.2%
-11.2%
-12.8%
Jobseeker Support recipients
12.2%
10.7%
11.7%
Level
Unemployment rate
2.7%
3.8%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Thames-Coromandel District

The first effects of the COVID-19 pandemic and recession are starting to show through in Thames-Coromandel, with economic activity slowing. Provisional estimates show economic growth in the District softened to 1.2%pa in the march 2020 year, following an already softer December 2019 result. Although most indicators continued to see growth, this growth was slower, and signals a period of weaker activity as the economy recovers.

Softer economic activity saw traffic flows in Thames-Coromandel rise by only 0.7%pa – better than the regional and national average, but still a shift downwards as travel slowed and freight needs reduced. Construction efforts are also set to soften, with a lower profile of building expected over the next year reinforced by 1.0%pa residential consent growth.

Tourism activity held up in the March 2020 year. MBIE data shows tourist spending in Thames-Coromandel remained above $400m in the March 2020 year, up 5.1% on the previous 12 months. With the collapse in international tourism spending since late March the tourism sector faces tough times and will need to compete for a limited pool of domestic tourist spending.

Households continue to spend in the local economy but are already showing more caution than previously. Spending data from Marketview shows a 7.5% increase in consumer spending over the 12 months to March 2020, having slowed from 8%+ over the previous year. We expect a more cautious spending profile to emerge as the labour market deteriorates, with job losses, lower hours, and possible pay cuts limiting household budgets.

Concerns over the labour market are also starting to show through. Unemployment in Thames-Coromandel rose slightly to 2.7%, after reaching a 10-year low of 2.5% over 2019. Rising Jobseeker Support numbers support our view of a weakening labour market, with a 12% rise in those seeking assistance from the government.

Overview of national economy

The COVID-19 pandemic has upended the economy and plunged New Zealand into the sharpest recession in living memory. The March quarter includes the full progression of the virus, from its origins in China and subsequent hit to New Zealand exports, through to border closures forcing lower tourism arrivals, before culminating in the lockdown of New Zealand under Alert Level 4. Our March 2020 Quarterly Economic Monitor only captures the initial economic effects of putting the New Zealand economy on life support. The June Monitor will better reflect activity changes. No sector of the economy will be spared, with the regional impacts dependant on the local economic structure – Infometrics is now forecasting the loss of 250,000 jobs nationally over the next year, followed by a long period of restructuring the economy.