Rotorua District Quarterly economic monitor - September 2018

Overview

Indicator Rotorua District Bay of Plenty Region New Zealand
Annual average % change
Gross domestic product
4.2%
3.5%
2.9%
Traffic flow
3.4%
4.6%
3.9%
Residential consents
8.6%
-19%
5.4%
Non-residential consents
-11%
30%
4.9%
House prices*
3.9%
3.7%
8.4%
House sales
-9.1%
-1.8%
-0.6%
Guest nights
5.3%
1.9%
2.7%
Retail trade
5.0%
5.7%
4.8%
Car registrations
11%
2.7%
-1.7%
Commercial vehicle registrations
-0.2%
3.1%
2.3%
Jobseeker Support recipients
2.0%
3.2%
2.2%
Tourism expenditure
6.1%
5.8%
8.2%
Level
Unemployment rate
5.5%
4.8%
4.3%
International net migration
717
1,823
62,735
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Rotorua District

Growth in the Rotorua economy strengthened in the September 2018 year. Infometrics’ preliminary estimates show GDP growth of 4.2%, while growth across the Bay of Plenty region dipped slightly to 3.5%. Rotorua’s growth was also well ahead of the 2.9% national average.

Tourism spending increased to $827m in the September 2018 year, up 6.1% from the year before. Guest nights were particularly strong, increasing 5.3% in the September 2018 year compared with 2.7% nationally. The New Zealand dollar’s significant depreciation over the past six months will boost the budgets of visitors to New Zealand this summer season.

Electronic card spending on retail purchases in Rotorua grew 5.0% in the September 2018 year compared with 4.8% growth nationally. Car registrations are another area of strength, growing 11% in Rotorua compared with a 1.7% fall nationally – although in Rotorua the last few quarters have been flat which might suggest annual growth is about to moderate.

Economic growth is translating into more jobs. Rotorua’s unemployment rate fell to an average of 5.5% in the September 2018 year, its lowest since 2009. But there remains a vulnerable group who are not sharing in these job gains. The average number of Jobseeker Support recipients in Rotorua has been trending upwards since mid-2016. In the September 2018 year, they grew 2.0%, slightly below national growth of 2.2%.

Housing market results are mixed. House prices grew 3.9% in the September 2018 year, the lowest growth rate since mid-2015, and well below national growth of 8.4% in the September 2018 year. House sales fell 9.1% in the September 2018 year. Recent quarterly results suggest sales may have bottomed out, but they remain well below their recent peak in mid-2016. Residential consents in Rotorua grew 8.6% in the September 2018 year, in contrast to a 19% fall across the Bay of Plenty Region, and ahead of 5.4% growth nationally. The decline in non-residential consents since late 2016 is showing signs of slowing down, but in the September 2018 year they were down 11% in Rotorua compared with 4.9% growth nationally.

Overview of national economy

We’ve revised up our forecasts of economic growth. It’s not a big change – our growth projection for the year to June 2019 has lifted from 2.7% to 2.9%. But it’s an upward revision and so is at odds with the air of despair being generated by negative business and consumer confidence surveys. Better economic growth in the near term is largely about government spending. Aside from government spending, the other major upward revision is the export outlook. Export prices are at their highest level since 2014 in NZ dollar terms.