Nelson-Tasman Quarterly economic monitor - March 2018

Overview

Indicator Nelson-Tasman New Zealand
Annual average % change
Gross domestic product
3.5%
2.7%
Traffic flow
6.4%
2.0%
Residential consents
7.0%
2.5%
Non-residential consents
-16%
2.6%
House prices*
7.6%
9.5%
House sales
-1.6%
-15%
Guest nights
2.4%
3.9%
Retail trade
4.6%
4.5%
Car registrations
10%
4.4%
Commercial vehicle registrations
18%
13%
Jobseeker Support recipients
-3.3%
-0.5%
Tourism expenditure
7.9%
9.3%
Level
Unemployment rate
3.2%
4.6%
International net migration
664
67,986
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Nelson-Tasman

Nelson-Tasman’s economy enjoyed a strong start to 2018. Infometrics’ provisional estimate of GDP shows growth of 3.5% in Nelson-Tasman over the March 2018 year, well above the 2.7%pa rate of growth experienced nationally. Growth was most rapid in Tasman District (up 4.3%), but Nelson City (2.9%) also grew faster than the national average. Most indicators of spending and investment behaviour are performing close to or better than national averages, while employment conditions continue to strengthen.

Sustained strength in Nelson-Tasman’s economy has led to further improvement in the labour market. The average number of people receiving Jobseeker Support fell 3.3% over the March 2018 year. Infometrics’ estimates show Nelson-Tasman’s unemployment rate is sitting at close to 3% for the first time since 2008.

International net migration to Nelson-Tasman continues to add significantly to population growth. Over the March year, Nelson-Tasman gained a net 664 international migrants, compared to an average annual inflow of 165 migrants over the past ten years. This population growth, coupled with better job prospects, buoyed household confidence to spend. Data from Marketview shows that electronic card spending on retail purchases increased 4.6% over the March 2018 year. Spending growth is also apparent for major items, with car registrations in Nelson-Tasman climbing 10% over the past year.

Nelson-Tasman’s construction sector is very busy. The number of residential dwelling consents climbed by 7.0% over the March 2018 year. We are not reading much into the slight easing of non-residential consents as consent volumes remain some 20% above long-term averages and there is more than enough consented work to keep construction firms busy over the year ahead. The challenge for construction firms remains finding and retaining labour, as demand for construction workers is elevated throughout the South Island.

The tourism sector has had a record year, despite weather disruptions hampering parts of the summer season and a reopening of SH1 south reducing the number of visitors using the alternate inland route south. Visitor spending over the March 2018 year climbed 7.9% to a record $683m. Commercial guest nights grew a more sluggish 2.4%, but Infometrics estimates show that Airbnb guest nights during the summer months climbed 42% from a year ago. Airbnb guest nights over the past year were equivalent to approximately 17% of the number of commercial guest nights.

Overview of national economy

The prediction by Winston Peters of an economic correction or slowdown, made at the time of last October’s coalition announcement, appears to be coming true. Infometrics’ latest forecasts see New Zealand’s economic growth slowing to 2.4%pa by the end of this year and slipping below 2.0%pa during 2019. A range of factors have combined to drive the slowdown, many of which can be sheeted back to government policy. Weaker population growth will also mitigate some of the demand pressures in the Auckland housing market, but the region’s housing undersupply and affordability issues are likely to remain critical.