Rotorua District Quarterly economic monitor - March 2019

Overview

Indicator Rotorua District Bay of Plenty Region New Zealand
Annual average % change
Gross domestic product
2.4%
2.8%
2.5%
Traffic flow
2.3%
3.8%
0.6%
Health Enrolments
0.6%
1.9%
1.7%
Consumer spending
3.7%
5.3%
4.1%
Residential consents
10.7%
-13.6%
10.0%
Non-residential consents
21.3%
9.3%
7.6%
House prices*
11.3%
5.9%
1.3%
House sales
1.8%
3.7%
1.6%
Guest nights
-2.7%
-3.2%
0.6%
Tourism expenditure
0.5%
2.6%
3.3%
Car registrations
-6.3%
-5.0%
-7.6%
Commercial vehicle registrations
2.8%
2.1%
-0.07%
Jobseeker Support recipients
4.5%
6.9%
7.6%
Level
Unemployment rate
5.0%
4.5%
4.3%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Rotorua District

The Rotorua District economy enjoyed a solid start to 2019 supported by a strong forestry sector, a robust dairy sector and a buoyant housing market. Infometrics’ provisional GDP growth estimate for the district was 2.4% for the March 2019 year, similar to the national average.

Log prices remained strong in early 2019 underpinned by solid domestic and international demand, and funding from the Government’s forthcoming Wellbeing Budget for Te Uru Rākau (Forestry New Zealand) to build new premises in Rotorua will be a welcome boost for the district. Fonterra’s farmgate milk price forecast for the 2018/19 dairy season is currently $6.30-$6.40/kgMS. At these prices, Rotorua’s dairy farmers are expected to remain in the black with a forecast $349m pay-out for the 2018/19 season, down $6m on 2017/18 but well up on the previous three years.

Annual growth in house prices strengthened to 11% in the March 2019 quarter compared with a year earlier. House sales rose 1.8% in the March 2019 year, next to a national increase of 1.6%. Residential consents remined relatively subdued, growing 11% in the March 2019 year mainly due to a particularly weak March 2018 quarter. Non-residential consents have started to pick up, growing 21% in the March 2019 year.

Tourist spending grew 0.5% in the April 2019 year, no doubt boosted by events such as the Crankworks International Mountain Bike festival in March. Guest nights were down 2.7% in the March 2019 year but remain at historically high levels despite being a little down on their recent peak in mid-2018.

Strength in the local economy is also translating into jobs with the district’s unemployment rate falling to 5.0% in the March 2019 year, the lowest it has been since 2009.

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.