Whangarei District Quarterly economic monitor - December 2019

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Overview

Indicator Whangarei District Northland Region New Zealand
Annual average % change
Gross domestic product
2.1%
2.4%
2.3%
Traffic flow
0.9%
0.4%
1.7%
Health Enrolments
2.6%
1.7%
2.3%
Consumer spending
3.7%
4.6%
3.3%
Residential consents
-6.1%
-3.2%
13.8%
Non-residential consents
78.7%
5.7%
5.2%
House prices*
-3.4%
0.9%
3.6%
House sales
1.1%
-5.3%
-1.0%
Tourism expenditure
0.4%
0.4%
3.5%
Car registrations
-8.3%
-6.1%
-8.6%
Commercial vehicle registrations
4.0%
0.6%
-6.9%
Jobseeker Support recipients
11.7%
10.5%
10.6%
Level
Unemployment rate
5.0%
5.8%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Whangarei District

Economic activity in Whāngārei rose 2.2%pa over the 12 months to December 2019, according to provisional estimates from Infometrics. Economic growth continues to slow in line with the national trend, but recent revisions to historical data now show the economy growing at the fastest rate since the year to March 2018. Construction efforts and exports remain key drivers of local growth.

A continued pipeline of building activity in Whāngārei took non-residential consents growth to 78%pa over the 12 months to December 2019, equating to an increase of $42m in project spend over the previous year’s level. An additional $30m was consented in 2019 for retail and hospitality stores, offices, and industrial buildings, demonstrating sustained confidence from both households and businesses to spend and expand. Residential construction efforts slipped back a touch but consent numbers remain above the 10-year average. The slowing in residential construction activity likely reflects both the difficulty in sourcing construction staff as non-residential construction efforts ramp up, and softer house prices in Whāngārei which reduce the incentive to build.

A slight decline in house prices over the past year is likely to have muted growth in consumer spending. Marketview data shows spending in Whāngārei rose 3.7%pa over the 12 months to December 2019, continuing a trend of growth averaging in the mid-3% range.

Spending growth has been supported by primary sector strength, with an additional $28m expected from the 2019/20 dairy pay-out in Whāngārei. Meat prices also held at strong levels in 2019, even as tourism activity continues to come off the boil, with tourism spending growth slowing and remaining at below the national average growth rate. The COVID-19 outbreak will likely further dampen tourism activity in the first half of 2020 and will also affect primary sector exports. COVID-19 outbreak aside, rising traffic volumes in 2020 pointed towards a stable foundation for further economic growth, albeit at lower levels.

Overview of national economy

The economy looks to have turned a corner, at least temporarily, at the end of 2019. Although growth has slowed, some near-term indicators have shown an improvement. Traffic flows, tourism spending, and house prices have all shown renewed growth, and are set to provide a foundation for further growth in 2020. Government spending activity over the medium term also looks to support economic growth, but there remains little in the way of fundamental growth drivers over the next five years. With economic growth shifting down a gear in recent years, headline growth is likely to settle at a softer level. However, a significant risk to growth in 2020 is presented by the COVID-19 outbreak, which will restrain tourism and export activity, and could threaten consumer and business activity if the outbreak continues or spreads to New Zealand.