Thames-Coromandel District Quarterly economic monitor - March 2019

Overview

Indicator Thames-Coromandel District Waikato Region New Zealand
Annual average % change
Gross domestic product
2.5%
2.8%
2.5%
Traffic flow
2.0%
1.4%
0.6%
Health Enrolments
2.4%
2.2%
1.7%
Consumer spending
7.5%
5.1%
4.1%
Residential consents
-15.6%
12.6%
10.0%
Non-residential consents
69.7%
21.4%
7.6%
House prices*
5.9%
4.6%
1.3%
House sales
1.2%
2.6%
1.6%
Guest nights
4.6%
0.8%
0.6%
Tourism expenditure
9.9%
5.7%
3.3%
Car registrations
-9.8%
-4.0%
-7.6%
Commercial vehicle registrations
-1.4%
2.7%
-0.07%
Jobseeker Support recipients
4.4%
10.3%
7.6%
Level
Unemployment rate
3.0%
3.8%
4.3%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Thames-Coromandel District

Thames-Coromandel’s economy continues to grow, driven by a strong tourism sector, population growth, and further construction growth. Provisional estimates from Infometrics show the economy expanded by 2.5% over the 12 months to March 2019, in line with national growth.

Traffic flows in Thames-Coromandel rose 2.0% over the 12 months to March 2019, slowing in line with the New Zealand average, but supporting our view of moderate growth in Thames-Coromandel.

Part of this growth was driven by sustained strength in tourism, with guest nights in Thames-Coromandel rising 4.6% over the last 12 months. Domestic tourism drove this growth in guest nights, rising 7.2% in the Coromandel area, while international tourism fell 3.8%. Tourism spending in Thames-Coromandel rose 9.9% over the April 2019 year, having accelerated from 4.0% growth a year ago.

Consumer spending growth accelerated in the year to March 2019, up 7.5% from a year earlier, as consumers show a willingness to spend. Part of this growth in spending was due to the 2.4% increase in health enrolments, a broad proxy for population growth.

Construction also helped the local economy expand, with non-residential construction consents rising 70% over the 12 months to March 2019. An extra $9m in consents over the period took the total value of non-residential consents to nearly $22m. Of this, $7.1m is for additional shop, restaurant, and bar construction. This investment demonstrates optimism for ongoing growth in consumer spending.

Continued growth means that the labour market in Thames-Coromandel remains tight, with the unemployment rate at 3.0%. The rate is slightly above the 10-year low in mid-2018, but still well below the New Zealand average. The number of Jobseeker support recipients rose 4.4% in Thames-Coromandel over the 12 months to March 2019, but this growth was slower than the national average of 7.6%. This rise was probably driven more by the easing of conditions under which a person can receive a benefit than actual labour market conditions.

Overview of national economy

The economy remains in a holding pattern, with uncertainty increasing the risk of economic paralysis. Global concerns continue to circle, with Brexit, a European slowdown, and the US-China trade war all issues that threaten New Zealand’s export outlook. The Reserve Bank has cut the official cash rate (OCR) to 1.5% in the face of poor business investment, global concerns, and subdued inflation. This leaves the Bank with little ammunition to combat a future unexpected shock. Government spending growth remains slow, restricting the impact of any additional fiscal stimulus. Construction appears to be a bright spot on our outlook, but the labour market presents a more mixed picture, with low unemployment but slowing employment growth.