Manawatu Quarterly economic monitor - December 2018

Overview

Indicator Manawatu New Zealand
Annual average % change
Gross domestic product
3.2%
2.7%
Traffic flow
1.6%
2.7%
Health Enrolments
1.2%
1.9%
Consumer spending
5.4%
4.5%
Residential consents
31%
6.1%
Non-residential consents
77%
9.0%
House prices*
10%
2.3%
House sales
3.7%
3.1%
Guest nights
3.8%
2.3%
Tourism expenditure
4.2%
4.3%
Car registrations
-3.2%
-6.7%
Commercial vehicle registrations
14%
1.6%
Jobseeker Support recipients
6.2%
4.8%
Level
Unemployment rate
5.4%
4.3%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Manawatu

Manawatu continues to enjoy a strong economic performance on the back of buoyant consumer spending and a healthy primary sector. However, a dip in population growth at the back end of 2018 may signal weaker economic growth is ahead.

Infometrics’ provisional GDP growth estimate for the region was 3.2% in the December 2018 year next to a national average of 2.7%. Growth in electronic card spending on retail purchases in the region accelerated to 5.4% in the December 2018 year compared with 4.5% nationally - the third consecutive quarter that consumer spending growth in the region has been above the national average.

Both lamb and beef prices remained high in the December quarter, the forestry sector is in a strong position and Manawatu dairy farmers received a payout of $289m in 2018, well up on $267m in 2017. The payout in 2019 is expected to soften to $271m.

We have recently begun using enrolments at primary health providers as a timely proxy for population growth. In the December 2018 year population growth in the region fell to 1.2%, well down on 2.6% growth in the December 2017 year.

House price inflation refuses to weaken, bucking the national trend. House prices in the region grew 10% in the December 2018 year compared with just 2.3% growth nationally. Building consents in the region were also very strong in 2018 which should keep the region’s construction sector busy going into 2019. Residential consents grew a whopping 31% in the December 2018 year compared with 6.1% growth nationally. Non-residential consents in the region grew 77% in the December 2018 year to reach an unprecedented $157m.

The region’s unemployment rate averaged 5.4% in the December 2018 year, compared with 4.3% nationally.

Overview of national economy

Throughout 2018, business confidence indicators suggested the New Zealand economy was going to crash and burn. But although growth slowed slightly, there were no other signs we were staring down the barrel of a full- blown recession. Looking to 2019, New Zealand’s domestic economy remains in a similar position to 12 months ago: prospects of middling growth, somewhat hampered by capacity constraints and a tight labour market, and with some of the biggest potential shifts being driven by government policies (such as migration or the housing market). In contrast to this largely unchanged domestic picture, many question marks have appeared during the last year over the international economic environment.