Whangarei District Quarterly economic monitor - September 2019

Overview

Indicator Whangarei District Northland Region New Zealand
Annual average % change
Gross domestic product
2.3%
2.2%
2.4%
Traffic flow
-0.05%
0.6%
1.3%
Health Enrolments
2.5%
1.9%
2.0%
Consumer spending
3.5%
5.1%
3.4%
Residential consents
1.2%
5.5%
12.0%
Non-residential consents
73.4%
5.8%
12.7%
House prices*
2.8%
5.9%
1.9%
House sales
-0.2%
-3.6%
-0.7%
Guest nights
-1.0%
0.2%
1.2%
Tourism expenditure
-0.09%
-0.3%
3.1%
Car registrations
-7.8%
-8.3%
-8.5%
Commercial vehicle registrations
10.4%
4.1%
-1.6%
Jobseeker Support recipients
11.8%
10.2%
10.3%
Level
Unemployment rate
5.0%
5.8%
4.2%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Whangarei District

The Whangarei economy continues to grow, with provisional estimates from Infometrics showing economic activity rose 2.3%pa over the September 2019 year. Growth has been slowing over recent quarters, in line with slower national growth. The foundations for sustained economic growth remain, with population growth, stronger agricultural pay-outs, and construction activity all contributing to this growth.

Whangarei has a larger, and faster growing, population than previously thought. Revised population figures for Whangarei saw 2,300 more people recorded in Whangarei in 2018, compared to an earlier estimate – the sixth-largest upwards revision in New Zealand. Whangarei’s larger population continues to grow, with health enrolments in the area rising 2.5%pa over the September 2019. Population rises have supported more retail activity, with consumer spending in Whangarei rising 3.5% according to Marketview data.

A larger population has increased construction activity locally. Non-residential consents over the September 2019 year have risen over 70% compared to a year earlier. This growth has come with significant consents, worth $96m, lodged over the last quarter, primarily for industrial and office construction projects. Sustained construction activity strength is buoying business confidence, with commercial vehicle registrations up 10%pa even as national registrations declined.

Businesses will also be feeling more confident about the future with the latest announcement from Fonterra that they have raised the farmgate milk price for the 19/20 season to a midpoint of $7.05/kgms. The higher milk price will bring an additional $23m into the Whangarei economy, and with global milk supply growth remaining low and GlobalDairyTrade auctions returning high prices, there is potential for the milk price to head even higher.

The international visitor market to New Zealand is softening, which has seen a decline in tourism activity in Whangarei. Both guest nights and tourism spending fell over the year to September, and this trend of lower tourism outcomes is likely to continue.

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.