Nelson-Tasman Quarterly economic monitor - December 2017

Overview

Indicator Nelson-Tasman New Zealand
Annual average % change
Gross domestic product
2.9%
2.8%
Traffic flow
12%
1.6%
Residential consents
-1.5%
3.4%
Non-residential consents
18%
8.0%
House prices*
11%
3.9%
House sales
-8.4%
-17%
Guest nights
4.3%
2.5%
Retail trade
5.2%
4.3%
Car registrations
18%
8.0%
Commercial vehicle registrations
18%
16%
Jobseeker Support recipients
-0.7%
0.06%
Tourism expenditure
7.0%
6.4%
Level
Unemployment rate
3.0%
4.7%
International net migration
642
70,017
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Nelson-Tasman

Nelson-Tasman’s economy expanded by 2.9% in the December 2017 year, according to Infometrics’ provisional estimate of GDP. Business investment grew particularly strongly during 2017, while household spending and visitor activity also improved.

Increasing confidence among the business community pushed up employment demand in Nelson-Tasman. The region’s unemployment rate has fallen to its lowest level since 2007, while the average number of people receiving Jobseeker Support in 2017 was 0.7% below its 2016 level. A buoyant labour market helped attract a net international migration inflow of 642 people, compared to six years ago when Nelson-Tasman had an annual net migration outflow of almost 500 people per annum.

Infometrics’ Regional Economic Profile shows that there were an additional 1,020 jobs in Nelson-Tasman in the March 2017 year. This growth was driven by gains in construction (215 jobs), accommodation and food services (191), retail trade (129), health care and social assistance (94), and wholesale trade (84). Employment also grew strongly in transport (80 jobs) and professional services (66).

Growth in accommodation, food services, and retail employment is not surprising when one considers the sharp increase to visitor activity in Nelson-Tasman. Commercial guest nights rose 4.3% to a record 1.5m in 2017, while visitor spending totalled $663m, compared to $620m in 2016. Growth in tourism activity could be constrained in the March quarter due to significant storm damage from Cyclone Gita. The reopening of the SH1 north of Kaikoura will also mean some visitors drive along the east coast of the South Island, instead of stopping through Nelson-Tasman.

Business investment pushed higher in 2017, with the total value of non-residential consents climbing 18%. Commercial vehicle registrations also rose 18% to a record 1,160 in 2017. Better employment conditions left households feeling more confident to spend. Data from Marketview showed that electronic card spending on retail purchases increased 5.2% in 2017, while there was 18% growth in the number of car registrations.

The outlook for agriculture remains solid. High export prices for meat, horticultural, seafood, and forestry exports will help boost Nelson-Tasman’s economy.

Overview of national economy

Economic growth, after having grown at rates exceeding 3.0%pa for much of the past three years, is expected to ease slightly to closer to 2.5%pa this year. Labour capacity constraints in the residential construction sector, changes in central government’s infrastructure priorities, and slightly disappointing dairy prices will all keep a lid on growth this year. More subdued growth in business investment is likely in the wake of lower levels of business confidence. Despite the Reserve Bank keeping a lid on the Official Cash Rate, finance costs are still likely to push higher during 2018, due to recent rises in international money and bond market yields.