Timaru District Quarterly economic monitor - June 2019

Overview

Indicator Timaru District Canterbury Region New Zealand
Annual average % change
Gross domestic product
1.8%
1.7%
2.5%
Traffic flow
0%
0.8%
1.5%
Health Enrolments
0.8%
1.7%
1.8%
Consumer spending
1.7%
2.5%
4.0%
Residential consents
-10.3%
-0.06%
5.8%
Non-residential consents
-19.7%
3.7%
7.9%
House prices*
3.1%
0.4%
1.4%
House sales
8.2%
3.1%
-0.9%
Guest nights
-2.7%
2.6%
1.3%
Tourism expenditure
4.1%
4.5%
3.2%
Car registrations
-9.0%
-9.7%
-8.6%
Commercial vehicle registrations
0.5%
-6.8%
0.3%
Jobseeker Support recipients
9.2%
17.0%
9.6%
Level
Unemployment rate
2.1%
3.7%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Timaru District

Timaru’s economy has been growing steadily, with Infometrics provisional GDP estimates showing growth of 1.8% in the year to June 2019, compared with 1.6% to June 2018.

Timaru’s housing market is buoyant, with the number of sales up 8.2% in the June year compared to last year, and values up 3.1%, ahead of national growth of 1.4%. Despite this, consumer spending in the district was muted, up by a marginal 1.7%pa compared to 4.0% nationally. Car registrations are down too, by 9.0%pa, but this is broadly consistent with the national trend. Population growth, as measured by health enrolments, remains below 1%pa in the district, and approximately half of the national rate.

Timaru dairy farmers are expected to receive $351m for the 2018/19 season, down $11m from the season prior due to successive downward revisions in the farmgate price. Fonterra has indicated a wide potential farmgate price for the coming season, but it is likely to be the same if not higher than last season. Having three years in a row of solid pay-outs should give farmers confidence to invest in their future, a positive for communities and businesses supplying the dairy sector.

Commercial vehicle registrations and non-residential building consents both indicate business confidence, and both have been relatively flat over the past year. Similarly, traffic volumes in the district have held steady between June this year and last year.

Timaru’s unemployment rate has been tracking downwards for several years, reaching a record low of 2.1% in the year to June 2019, and representing a very tight labour market. Jobseeker Support recipients notched up by 9.2% in the year to June, but this is predominantly a result of changes to national policies around benefit eligibility and sanctions.

Tourism indicators continue to diverge in Timaru, showing strong growth in expenditure by visitors, but an easing in guest nights at commercial accommodation. This could be explained by increased peer to peer accommodation or spending by visitors stopping in the district on their way through.

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.