Rotorua District Quarterly economic monitor - September 2019

Overview

Indicator Rotorua District Bay of Plenty Region New Zealand
Annual average % change
Gross domestic product
2.1%
2.5%
2.4%
Traffic flow
1.9%
2.6%
1.3%
Health Enrolments
-0.5%
1.7%
2.0%
Consumer spending
3.4%
5.1%
3.4%
Residential consents
44.1%
0.6%
12.0%
Non-residential consents
65.3%
-13.4%
12.7%
House prices*
14.2%
11.0%
1.9%
House sales
5.1%
1.1%
-0.7%
Guest nights
-1.7%
-0.4%
1.2%
Tourism expenditure
0.6%
4.2%
3.1%
Car registrations
-16.4%
-8.8%
-8.5%
Commercial vehicle registrations
-2.3%
1.4%
-1.6%
Jobseeker Support recipients
9.7%
11.1%
10.3%
Level
Unemployment rate
5.5%
4.3%
4.2%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Rotorua District

The Rotorua economy continues to perform well. Infometrics’ provisional GDP estimate grew 2.1% in the September 2019 year while electronic card spending on retail purchases in the district grew by a solid 3.4% in the September 2019 year. Nationally, consumers remain optimistic about the economy, but are becoming increasingly cautious in their outlook.

The dairy sector outlook has improved over the last month, with strong trade prices strengthening pay-out expectations for the 2019/20 season. Higher dairy prices have been driven by tightened milk supply globally.

Non-residential consents in the district grew 65% in the September 2019 year having risen for the fourth successive quarter, while residential consents were equally impressive growing 44% thanks largely to a strong September 2019 quarter.

Rotorua’s population has been growing faster than previously estimated. Following the release of the 2018 census, StatsNZ has revised Rotorua’s 2018 population upwards to 74,000 from the previous estimate of 72,500. By June 2019, StatsNZ estimate that the district’s population had increased a further 1.5% to reach 75,100.

House price inflation is showing signs of taking off again, reaching 14% in September 2019. We expect that low interest rates, the scrapping of the capital gains tax proposal, and the loosening of loan to value ratio restrictions, with the potential for more to come, will boost the housing market going into 2020.

Guest nights in Rotorua were down 1.7% in the September 2019 year having peaked last year. Tourism spending edged up 0.6% to reach $828 million. Nationally, domestic tourism and arrivals of tourists from across the Tasman are currently offsetting a decline in tourist arrivals from China.

Rotorua’s unemployment rate rose slightly to 5.5% for the September 2019 year. The average number of Jobseeker Support recipients in the district rose 9.7% in the September 2019 year on a par with both regional and national trends.

Overview of national economy

Warning signs continue to appear for the direction of the New Zealand economy over the next few years, even as current activity remains solid. There is a growing divide between current activity and the outlook for the future, with global and domestic uncertainty at odds with current demand-led growth. There are both upside and downside risks to the future direction of travel, although on balance a deteriorating economic outlook is more likely. An expected pick-up in the housing market over 2020 has the potential to draw the economy out of the doldrums, but continued slower global economic growth, low domestic investment, and slowing spending growth could tip the economy in the other direction.