Porirua City Quarterly economic monitor - March 2019

Overview

Indicator Porirua City Wellington Region New Zealand
Annual average % change
Gross domestic product
3.1%
2.0%
2.5%
Traffic flow
1.4%
2.7%
0.6%
Health Enrolments
1.8%
1.7%
1.7%
Consumer spending
6.4%
4.1%
4.1%
Residential consents
-14.7%
5.9%
10.0%
Non-residential consents
4.3%
-2.9%
7.6%
House prices*
7.5%
5.8%
1.3%
House sales
7.4%
-2.0%
1.6%
Guest nights
12.9%
1.8%
0.6%
Tourism expenditure
2.9%
6.3%
3.3%
Car registrations
2.3%
-5.3%
-7.6%
Commercial vehicle registrations
8.9%
-1.4%
-0.07%
Jobseeker Support recipients
2.8%
5.0%
7.6%
Level
Unemployment rate
6.0%
4.4%
4.3%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Porirua City

The Porirua City economy made a confident start to 2019 with robust population growth, strong consumer and tourist spending, and a busy housing market all underpinning growth in economic activity. Infometrics’ provisional GDP growth estimate for the city edged up to 3.1% for the March 2019 year, well ahead of the Wellington regional average of 2.0% and the national average of 2.5%.

Health enrolments, a broad proxy for population growth, grew by 1.8% in the March 2019 year and have now been consistently above 1.7% since the start of 2018. The city’s population growth has been stimulating house sales, which grew 7.4% in the March 2019 year compared with a national average of just 1.6%. Sales in Porirua have been trending upward in recent quarters despite being down on the peak in activity seen in mid-2016. Sales are translating into house price inflation. House prices in Porirua grew 7.5% in the March 2019 quarter compared with a year earlier compared with the national average of 1.3%. Residential consents fell 15% in the March 2019 year, due mostly particularly strong consent numbers in 2017.

Tourists spent an unprecedented $99.8m in the local economy in the year to April 2019 with annual growth in tourism expenditure of 2.9% in the April 2019 year just below the 3.3% national average. Guest nights in the city were also up 13% in the March 2019 year, well ahead of 0.6% growth nationally.

Other indicators of economic activity all point to a vibrant local economy. In the March 2019 year, traffic flows grew 1.4%, electronic card spending on retail purchases were up 6.4%, car registrations rose 2.3%, and 8.9% growth in commercial vehicle registrations indicates that businesses are feeling confident.

The average annual unemployment rate stood at 6.0% for the March 2019 year, the lowest it has been since 2009 but still higher than the national average of 4.2%. The average number of Jobseeker Support recipients rose 2.8% in the March 2019 year. This rise was probably driven more by the easing of conditions under which a person can receive a benefit than labour market conditions and compares well against the backdrop of a 7.6% rise nationwide.

Overview of national economy

The economy remains in a holding pattern, with uncertainty increasing the risk of economic paralysis. Global concerns continue to circle, with Brexit, a European slowdown, and the US-China trade war all issues that threaten New Zealand’s export outlook. The Reserve Bank has cut the official cash rate (OCR) to 1.5% in the face of poor business investment, global concerns, and subdued inflation. This leaves the Bank with little ammunition to combat a future unexpected shock. Government spending growth remains slow, restricting the impact of any additional fiscal stimulus. Construction appears to be a bright spot on our outlook, but the labour market presents a more mixed picture, with low unemployment but slowing employment growth.