Kapiti Coast District Quarterly economic monitor - March 2019

Overview

Indicator Kapiti Coast District Wellington Region New Zealand
Annual average % change
Gross domestic product
1.7%
2.0%
2.5%
Traffic flow
1.2%
2.7%
0.6%
Health Enrolments
1.0%
1.7%
1.7%
Consumer spending
4.2%
4.1%
4.1%
Residential consents
-14.3%
5.9%
10.0%
Non-residential consents
-45.2%
-2.9%
7.6%
House prices*
6.8%
5.8%
1.3%
House sales
6.6%
-2.0%
1.6%
Guest nights
3.9%
1.8%
0.6%
Tourism expenditure
1.9%
6.3%
3.3%
Car registrations
-6.6%
-5.3%
-7.6%
Commercial vehicle registrations
7.8%
-1.4%
-0.07%
Jobseeker Support recipients
4.5%
5.0%
7.6%
Level
Unemployment rate
3.8%
4.4%
4.3%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Kapiti Coast District

Kapiti’s economy is tracking well across most indicators, however weak building consents present a weaker outlook for the construction sector. The Kapiti Coast economy grew by 1.7% in the year to March 2019, compared to 2.5% nationally, based on Infometrics provisional estimates.

Health enrolments in Kapiti, a proxy for population, grew by 1.0% in the year to March 2019, having slowed over the last year. This modest population growth, in conjunction with a modest increase in household confidence, underpin a 4.2% increase in consumer spending.

House sales in the district reached 1,149 over the year to March 2019, a touch above the 10-year average of 1,114. House prices in the district grew by 6.8%, with growth rates closely following the broader Wellington Region while average house values sit around $120,000 below the regional average. Demand for the district’s houses isn’t translating into construction, with new dwelling consents down 14.3% year on year, and sitting below the 10-year average. Likewise, non-residential consents are weak, with consent values down 45.2% year on year, and below the 10-year average. It will take some time for the impact of this to flow through to the construction sector, particular non-residential, due to the lag between consent issuance and project completion. However, going forward, it’s increasingly likely that Kapiti contractors will have to travel outside the district for work, adding to traffic on key highway corridors.

Traffic volumes on state highways in Kapiti grew by 1.2% in the year to March 2019, meanwhile traffic across the Wellington Region grew by 2.7%.

Unemployment eased to 3.8% in the year to March 2019, a 10-year low for the district, and below the national average of 4.2%. Jobseeker support recipients have grown 4.5% to 1,456 over the past year, beneath the national growth rate of 7.6%. The number of recipients is broadly in line with the 9-year average for the district of 1,450. Coupled with record low unemployment, this suggests a small group of community is struggling to gain traction in the employment market.

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.