Manawatu Quarterly economic monitor - March 2020

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Overview

Indicator Manawatu New Zealand
Annual average % change
Gross domestic product
1.7%
1.7%
Traffic flow
-0.5%
-0.2%
Health Enrolments
3.2%
2.5%
Consumer spending
2.9%
3.0%
Residential consents
0.9%
9.0%
Non-residential consents
6.8%
-0.4%
House prices*
14.8%
5.9%
House sales
-2.7%
2.0%
Tourism expenditure
0.7%
1.4%
Car registrations
-11.6%
-11.5%
Commercial vehicle registrations
-7.0%
-12.8%
Jobseeker Support recipients
4.8%
11.7%
Level
Unemployment rate
4.2%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Manawatu

Growth in the Manawatū Regional economy continued to soften in the March 2020 quarter, reflecting a slowing national economy. Infometrics’ provisional GDP estimate for the Manawatū Region grew 1.7% in the March 2020 year on a par with national growth. Consumer spending in the region remained robust at 2.9% in the March 2020 year, although with car registrations down 12% (the fourth consecutive decline) consumers seem less willing to splash out on big ticket items.

The region’s dairy payout for the 2019/20 season is forecast to reach $332m, up from $289m the year before. However, there has been downward pressure on dairy prices recently and high feed prices brought about by current drought conditions are posing a threat to farmers’ profitability.

The region’s unemployment rate edged down further to 4.2% for the March 2020 year and the number of Jobseeker Support recipients grew by a relatively modest 4.8% next to national growth of 12%.

House price inflation continues to soar in the region, with prices rising 15% in March 2020 next to national average growth of 5.9%. House sales in the region fell 2.7% in the March 2020 year but remain well above their 10-year average. Non-residential consents rose 6.8% in the March 2020 year on the back of a reasonably strong March 2020 quarter. Residential consents rose 0.9% in the March 2020 year and have been strong for the past three quarters. Assuming these consents translate into building work, this should help support the local construction industry through the coming downturn.

Despite its strengths, the Manawatū Regional economy will deteriorate markedly over the coming year due to COVID-19 and government measures to contain the pandemic. The lockdown will result in large falls in car and commercial registrations, consumer spending, and house sales in the June 2020 quarter, with the effects expected to ripple through the local economy for several quarters to come.

Overview of national economy

The COVID-19 pandemic has upended the economy and plunged New Zealand into the sharpest recession in living memory. The March quarter includes the full progression of the virus, from its origins in China and subsequent hit to New Zealand exports, through to border closures forcing lower tourism arrivals, before culminating in the lockdown of New Zealand under Alert Level 4. Our March 2020 Quarterly Economic Monitor only captures the initial economic effects of putting the New Zealand economy on life support. The June Monitor will better reflect activity changes. No sector of the economy will be spared, with the regional impacts dependant on the local economic structure – Infometrics is now forecasting the loss of 250,000 jobs nationally over the next year, followed by a long period of restructuring the economy.