Thames-Coromandel District Quarterly economic monitor - December 2019

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Overview

Indicator Thames-Coromandel District Waikato Region New Zealand
Annual average % change
Gross domestic product
2.6%
3.1%
2.3%
Traffic flow
1.2%
1.5%
1.7%
Health Enrolments
1.1%
2.9%
2.3%
Consumer spending
8.2%
3.8%
3.3%
Residential consents
-7.0%
13.6%
13.8%
Non-residential consents
-4.9%
14.4%
5.2%
House prices*
2.9%
6.0%
3.6%
House sales
0.4%
0.8%
-1.0%
Tourism expenditure
7.5%
3.6%
3.5%
Car registrations
-3.0%
-2.2%
-8.6%
Commercial vehicle registrations
-11.3%
-2.6%
-6.9%
Jobseeker Support recipients
7.4%
9.7%
10.6%
Level
Unemployment rate
2.6%
3.7%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Thames-Coromandel District

Thames-Coromandel’s economy expanded by 2.7%pa over the 12 months to December 2019, according to provisional estimates from Infometrics. Although local economic growth slowed slightly, its level remains above the national average. Household spending growth, visitor activity, and strong primary sector activity have all contributed to local growth.

Over the 12 months to December 2019, consumer spending in Thames-Coromandel rose 8.2%pa to top $549m, according to Marketview data. Households remain willing to spend, with consumer confidence around New Zealand remaining at or above long-term averages.

Local economic activity continues to support the labour market, with unemployment remaining close to decade-low levels. This trend is reinforced by Jobseeker Support numbers, which rose at a slower pace than the national or regional average.

However, construction growth seems to have levelled off, with residential consent numbers holding at around 300 per year, above the long-term average.

Instead, local spending growth has been supported by primary sector strength, with an additional $8m expected from the 2019/20 dairy pay-out in Thames-Coromandel. Meat prices in 2019 also held at strong levels, reinforcing this trend. Primary sector export earnings are however at risk during the first half of 2020, with the COVID-19 outbreak ongoing and the impact still uncertain.

Of equal concern is tourism activity in Thames-Coromandel, with the tourism sector comprising nearly 17% of local employment. Tourism spending over the year to December 2019 rose strongly again, up by 7.5%pa. However, with expectations for reduced visitor numbers from both China and wider tourism markets, and reduced demand for from China for primary products, the COVID-19 outbreak is likely to dampen tourism spending and export earnings in the first half of 2020.

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.