Nelson-Tasman Quarterly economic monitor - June 2019

Overview

Indicator Nelson-Tasman New Zealand
Annual average % change
Gross domestic product
2.2%
2.5%
Traffic flow
-2.5%
1.5%
Health Enrolments
1.1%
1.8%
Consumer spending
3.9%
4.0%
Residential consents
12.6%
5.8%
Non-residential consents
-0.2%
7.9%
House prices*
9.6%
1.4%
House sales
-2.8%
-0.9%
Guest nights
-0.6%
1.3%
Tourism expenditure
0.8%
3.2%
Car registrations
-9.7%
-8.6%
Commercial vehicle registrations
4.1%
0.3%
Jobseeker Support recipients
7.8%
9.6%
Level
Unemployment rate
3.8%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Nelson-Tasman

Although the Nelson-Tasman economy expanded by 2.1% in the year to June 2019 according to Infometrics’ provisional estimates, there are signs of slowing growth. Traffic flows, which tend to be a leading indicator of economic activity, declined by 2.5%pa.

Part of the weaker economic outlook is driven by concerns for the tourism sector amid lower Chinese arrivals and declining global demand. Guest nights in Nelson-Tasman decreased marginally, down 0.6%pa and tourist spending increased by less than 1%pa. Tourist spending is being dragged down by a decline in international tourist spending which accounts for a third of total tourism spending in the region. On the upside, domestic tourism spending is still climbing. Tourism accounts for nearly 10% of Nelson-Tasman’s GDP.

Health enrolments, a proxy for population growth, increased by 1.1% over the year to June 2019, down from 1.8% a year ago and lower than the national average of 1.8%.

The growing population is increasing demand for accommodation and driving up house values. Average house values increased by 13% over the June 2019 year, well above the national average of 1.4%.

The residential construction sector is responding to the demand for accommodation and rising house prices, with the number of housing consents reaching nearly 750 in the 12 months to June 2019. This was 200 higher than the 10-year average. The value of non-residential consents reached nearly $100m for the year, well above the 10-year average of $73m.

Unemployment in Nelson-Tasman remains low with an average rate of 3.8% over the 12 months to June 2019, compared with the national average of 4.1%. Despite the strength of the job market the number of Jobseeker Support recipients in Nelson-Tasman grew by 7.8% in the June year, although lower than growth in the national economy (9.6%). The increase is largely due to softening of benefit eligibility and sanction policies rather than actual labour market conditions.

Overview of national economy

The New Zealand economy continues to perform well, but concerns are growing about the future, with a long, slow, slowdown expected over the next few years. The Reserve Bank’s aggressive cut to the official cash rate (OCR) to 1.00% reflects a deteriorating economic outlook as both business and government investment remains poor, inflation remains low, and the employment outlook softens. With slowing population growth expected to eventuate before the end of the year, the focus turns to consumer spending and whether it can prop up economic growth, or if it too succumbs to global and domestic uncertainty.