Timaru District Quarterly economic monitor - September 2018

Overview

Indicator Timaru District Canterbury Region New Zealand
Annual average % change
Gross domestic product
2.1%
2.3%
2.9%
Traffic flow
1.3%
4.4%
3.9%
Residential consents
-7.7%
-9.6%
5.4%
Non-residential consents
-20%
-9.6%
4.9%
House prices*
-0.6%
1.9%
8.4%
House sales
-2.9%
2.3%
-0.6%
Guest nights
1.7%
9.9%
2.7%
Retail trade
4.7%
3.9%
4.8%
Car registrations
-0.8%
-4.1%
-1.7%
Commercial vehicle registrations
1.3%
1.4%
2.3%
Jobseeker Support recipients
-6.0%
9.3%
2.2%
Tourism expenditure
6.5%
15%
8.2%
Level
Unemployment rate
2.6%
3.8%
4.3%
International net migration
197
5,595
62,735
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Timaru District

Economic growth in Tīmaru remained above 2.0%pa throughout winter. Infometrics provisional estimate of GDP shows growth of 2.1% over the September year, compared to 1.2%pa growth the previous year. Below the headline, some indicators appear mixed, but we are heartened to see strong growth in retail spending and signs of improving job prospects.

The average number of people receiving Jobseeker Support in Tīmaru District has fallen significantly over the past 18 months. In the September 2018 year an average of 754 people received Jobseeker Support, compared to an average of 812 people in the March 2017 year. Tīmaru’s unemployment rate has now fallen to levels last seen in 2008.

Against a backdrop of improving job prospects, retail spending is expanding strongly. Data from Marketview shows that retail purchases on electronic cards in the September 2018 quarter totalled $137m, up $6m from a year ago. Over the past year retail spending in Tīmaru has grown 4.7%, compared to 3.0%pa growth the previous year.

Although dairy prices have come under downward pressure this year, other parts of the primary sector are enjoying bumper returns. Export prices for forestry, meat, seafood, and horticultural products are all 10-20% above where they were a year ago. The fall in dairy prices must also be put in perspective. Even at current price levels, dairy farmers are on average about $1/kgms above breakeven point, and prices are some 50% above the disastrous 2015/16 season.

Of the spending and investment indicators that are a little mixed, the recent decline in homebuilding consents is consistent with a flattening of house prices. However, Tīmaru construction workers shouldn’t experience any shortages of work given that consent numbers in neighbouring districts rose strongly during spring. The 0.8% decline in car registrations is also not to get worried about, as it still left the annual number of registrations sitting at close to 2,000, which was 17% above its 2016 trough.

Overview of national economy

We’ve revised up our forecasts of economic growth. It’s not a big change – our growth projection for the year to June 2019 has lifted from 2.7% to 2.9%. But it’s an upward revision and so is at odds with the air of despair being generated by negative business and consumer confidence surveys. Better economic growth in the near term is largely about government spending. Aside from government spending, the other major upward revision is the export outlook. Export prices are at their highest level since 2014 in NZ dollar terms.