Manawatu Quarterly economic monitor - June 2020

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Overview

Indicator Manawatu New Zealand
Annual average % change
Gross domestic product
-1.1%
-2.1%
Traffic flow
-8.8%
-9.4%
Health Enrolments
2.3%
2.5%
Consumer spending
-3.2%
-2.8%
Residential consents
21.9%
8.1%
Non-residential consents
57.2%
-8.8%
House prices*
16.9%
7.5%
House sales
-10.8%
-6.0%
Tourism expenditure
-11.4%
-12.3%
Car registrations
-15.4%
-19.3%
Commercial vehicle registrations
-20.3%
-24.6%
Jobseeker Support recipients
9.5%
19.0%
Level
Unemployment rate
4.2%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Manawatu

The Manawatu regional economy contracted by 1.1%pa in the June 2020 year as measures to contain the COVID-19 pandemic saw the provisional Infometrics GDP estimates for Manawatu District and Palmerston North City fall 9.0%pa and 8.4%pa respectively in the June 2020 quarter.

Palmerston North City saw a 21%pa decline in electronic card spending on retail purchases in the June 2020 quarter, with Manawatu District seeing a 10%pa fall. Together these falls contributed to a 3.2% decline in consumer spending in the June 2020 year across the Manawatu region as a whole.

The region, particularly Manawatu District, is benefitting from continued strength in New Zealand’s food exports with meat and dairy export volumes both up on last year. The ANZ Commodity Price Index shows that dairy prices remain high. Infometrics estimates the Manawatu region’s 2019/20 dairy pay-out to be $332m, which is $43m higher than 2018/19. Meat export prices have eased a little but also remain at elevated levels.

A consequence of the contracting regional economy is a 9.5% rise in the number of Jobseeker Support recipients in the June 2020 year. Recipient numbers have been on an upward trajectory since 2018. The recent jump takes the region’s annual average number above 3,600, which is the highest since our series begin in 2010. However, the region’s growth of 9.5% isn’t nearly as rapid as the national growth of 19%.

House sales were down in the June 2020 year as expected, with lockdown during the June 2020 quarter constraining the number of days that properties could be traded. But building consents are a source of optimism for the building sector if they translate into building work. Residential consents in the region grew 22% in the June 2020 year on the back of an exceptional 251 consents issued in the June 2020 quarter. So too for non-residential consents, which rose 57% to an unprecedented $185m for the June 2020 year.

Overview of national economy

The New Zealand economy took a severe hit during the June 2020 quarter, as the COVID-19 pandemic saw the country locked down at home for around four weeks at Alert Level 4, before a rapid move down the Alert Levels to Level 1 in early June. The economy has endured a dramatic shift in focus, from life support at Level 4 to an adrenaline rush at Level 1. Yet the immediate economic ramifications are clear to see – economic activity has fallen, nearly 50,000 Kiwis lost their jobs, businesses struggled to cope with lower earnings, and incomes were reduced. The June quarter likely represents the largest single hit to the economy, but the economic scarring and restructuring will continue to occur over the coming years. New Zealand is not out of the woods yet.