Rotorua District Quarterly economic monitor - December 2018

Overview

Indicator Rotorua District Bay of Plenty Region New Zealand
Annual average % change
Gross domestic product
2.3%
2.7%
2.7%
Traffic flow
2.4%
3.7%
2.7%
Health Enrolments
1.5%
2.4%
1.9%
Consumer spending
4.8%
5.6%
4.5%
Residential consents
-1.3%
-20%
6.1%
Non-residential consents
15%
9.3%
9.0%
House prices*
5.3%
4.6%
2.3%
House sales
1.1%
4.0%
3.1%
Guest nights
2.3%
-0.08%
2.3%
Tourism expenditure
1.5%
2.1%
4.3%
Car registrations
-0.10%
-2.9%
-6.7%
Commercial vehicle registrations
1.6%
2.9%
1.6%
Jobseeker Support recipients
1.9%
4.5%
4.8%
Level
Unemployment rate
5.4%
4.8%
4.3%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Rotorua District

Infometrics provisionally estimates that Rotorua’s economy expanded by 2.3% over the December 2018 year, following GDP growth of 2.4% the previous year. Economic growth over recent years has been accompanied by strong job creation, which has been reflected in growth in most spending and investment indicators that we follow.

We have recently begun using enrolments at primary health providers as a timely proxy for population growth. The data shows that health enrolments in Rotorua grew 1.5% across 2018, following 2.1% growth in 2017.

An expanding population has pushed up spending on goods and services in Rotorua. Although both car registrations and new dwelling consents have pegged back from recent peaks, they remain well above historical averages. But there is no shortage of other construction work at present to keep builders busy, with non-residential consents rising 15%.

Consumer spending data from Marketview shows that electronic card spending climbed 4.8% in the December 2018 year, compared to 4.5% growth nationally. Spending in Rotorua grew by 5.4% the previous year.

A key contributor to spending growth over recent years has been the visitor economy, but growth of late has tapered off. Visitor spending in Rotorua rose 1.5% in 2018, following growth of 6.6% the previous year. Guest nights have followed a similar trajectory, slowing from 4.4% growth in 2017 to 2.3% growth in 2018.

We are not reading too much into the slight uptick in the number of Jobseeker Support recipients at present. Rotorua’s unemployment rate has approached decade-long lows, while the recently released Infometrics Regional Economic Profile showed that employment growth remained healthy in the March 2018 tax year, with 964 jobs added to Rotorua’s economy. Key drivers of employment growth were manufacturing, hospitality, accommodation, and public administration and safety.

Overview of national economy

Throughout 2018, business confidence indicators suggested the New Zealand economy was going to crash and burn. But although growth slowed slightly, there were no other signs we were staring down the barrel of a full- blown recession. Looking to 2019, New Zealand’s domestic economy remains in a similar position to 12 months ago: prospects of middling growth, somewhat hampered by capacity constraints and a tight labour market, and with some of the biggest potential shifts being driven by government policies (such as migration or the housing market). In contrast to this largely unchanged domestic picture, many question marks have appeared during the last year over the international economic environment.