Nelson-Tasman Quarterly economic monitor - June 2018

Overview

Indicator Nelson-Tasman New Zealand
Annual average % change
Gross domestic product
3.2%
2.7%
Traffic flow
2.4%
3.1%
Residential consents
5.8%
7.9%
Non-residential consents
2.2%
10%
House prices*
5.9%
4.9%
House sales
3.2%
-7.0%
Guest nights
1.0%
2.4%
Retail trade
4.0%
4.4%
Car registrations
7.9%
1.1%
Commercial vehicle registrations
9.0%
5.4%
Jobseeker Support recipients
-5.1%
0.05%
Tourism expenditure
10%
8.5%
Level
Unemployment rate
3.7%
4.5%
International net migration
528
64,996
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Nelson-Tasman

Economic growth in Nelson-Tasman continues to outpace the national average. Infometrics’ provisional estimate of GDP showed growth of 3.2% over the June year, well above the 2.7% estimate of GDP growth nationally. Strengthening commodity prices have pushed up provincial incomes, while ongoing growth in tourism activity and rising population levels have further supported demand across the upper South Island.

Nelson-Tasman’s sustained period of economic growth is being reflected in labour market outcomes. Over the June year there was a 5.1% decline in the average number of people receiving Jobseeker Support in Nelson-Tasman. ANZ analysis of job ads showed an 8.8% increase in the number of jobs advertised across Nelson/Tasman/Marlborough between June 2017 and 2018.

International prices for horticultural products have been tracking upwards, climbing 14% over the year to June 2018. Even after recent downward pressure on dairy prices, Fonterra’s current farmgate milk price forecast of $6.70/kgms, is still 70% higher than the disastrous 2015/16 season. Lamb prices recently cracked $8.00/kg for the first time on record, while strong growth in international wood prices has driven up the harvest rate of forests.

This backdrop of stronger commodity prices and better job prospects has buoyed confidence to make large purchases. Car registrations in Nelson-Tasman climbed 7.9% over the June 2018 year, while residential building consents climbed a further 5.8%.

These higher levels of homebuilding have contributed to a moderation of house price growth in Nelson-Tasman from a peak of over 16%pa in late 2016, to current levels of around 5.9%pa. But concerns remain regarding the building sector’s capacity to cope with further growth.

Nelson-Tasman’s tourism sector enjoyed a record start to winter. MBIE data shows that visitor spending over the June year climbed 10% to a record $711m. The tourism sector’s ability to cope with future projected growth will be enhanced with the opening of stage one of Nelson’s new $32m airport terminal in October.

Overview of national economy

Most of the New Zealand economy’s momentum over the next 18 months will come from provincial areas, thanks to strong export incomes. Low business confidence suggests that domestically focused firms are already reluctant to invest or hire. Households are also becoming more cautious about their spending in the face of higher fuel prices and the slowing housing market. The New Zealand economy needs the continuation of good export conditions to maintain a solid growth performance.