Timaru District Quarterly economic monitor - September 2017

Overview

Indicator Timaru District Canterbury Region New Zealand
Annual average % change
Gross domestic product
2.0%
1.3%
2.5%
Traffic flow
1.1%
1.1%
2.3%
Residential consents
-15%
-18%
3.0%
Non-residential consents
34%
-6.8%
5.9%
House prices*
2.8%
0.4%
3.1%
House sales
-8.6%
-12%
-17%
Guest nights
-2.4%
-0.4%
2.6%
Retail trade
2.9%
2.2%
3.8%
Car registrations
14%
8.7%
9.4%
Commercial vehicle registrations
21%
17%
19%
Jobseeker Support recipients
0.4%
9.1%
0.6%
Tourism expenditure
6.0%
3.9%
6.4%
Level
Unemployment rate
3.2%
3.8%
4.9%
International net migration
230
6,536
70,983
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Timaru District

Timaru District’s economy continues to recover strongly from its sluggish performance in 2016. Infometrics’ provisional estimate for GDP showed growth of 2.0% in the September 2017 year. That was still below the national average of 2.5%, but it was a marked improvement from the figure of -0.4% a year ago.

Indicators of spending and investment in the district were generally positive. Traffic flows in Timaru rose by 1.1% in the September 2017 year, and both car and commercial vehicle registrations outpaced the national average. Tourism expenditure has grown by 6.0% over the past year, yet guest nights fell by 2.4%. Airbnb listings in Timaru have soared by 116% over the past year, which may help to explain the strong tourism spending, but soft activity in the commercial accommodation sector.

Consumers in the district appear to be in good spirits. The number of house sales did drop in the September year, but that is just part of a wider national trend. Timaru’s house prices have risen by 2.8% over the past year and this is likely to have helped retail trade in the district to also expand by 2.9%. A low unemployment rate of just 3.2% will have supported house prices and retail spending. Unemployment has stayed low despite the district’s population rising by 400 in the June 2017 year.

Good prospects for the primary sector bode well for Timaru’s economic outlook. With 30% of the economy in either manufacturing (18%) or agriculture and forestry & fishing (12%), high prices for lamb, beef and dairy are positive for the district. A $6.50/kgMS milk price would inject an extra $20m into Timaru this season relative to 2016/17. Fishing also appears to be a growth sector for Timaru, with Sanford having already increased investment in the district and now looking to expand even further with a new fish processing room.

Longer term prospects such as a mooted oil and gas field 60 kilometres off the Oamaru coast could provide benefits for Timaru via increased freight and storage volumes through the port.

Overview of national economy

The New Zealand economy had a healthy September quarter. A rosy economic growth outlook, and signs that inflation is set to increase, raise the prospect of mortgage rates beginning to creep up later next year. More expansionary fiscal policy under the Labour government is a key driver of the solid GDP outlook. But capacity constraints in the residential construction sector remain a key risk.