Regional Trends
November 2011
Provincial Rivalry
Quarterly percentage change
Nine regions recorded a lift in economic activity in the September quarter, and
five regions registered weaker activity. For two successive quarters, Canterbury
has posted the strongest expansion in economic activity, with a 1.8 percent rise
in activity in the September quarter. Auckland recorded the second strongest lift
in the quarter, growing 1.2 percent. This represents the tenth consecutive quarterly
gain for the region's economy.
The nationwide measure of economic activity lifted 0.6 percent, which comes on the
heels of a 1.1 percent lift in June. Growth was faster in the South Island, lifting
1.1 percent, while economic activity in the North Island rose 0.5 percent.
Year-on-year growth
Year-on-year economic growth has slowed across most regions. On a nationwide basis,
our measure of economic growth eased to 0.6 percent in the year to September, which
was the lowest annual rate of growth since March 2010. Year-on-year economic growth
in the North Island was 0.8 percent. Annual economic activity was 0.2 percent weaker
in the South Island, which incorporates the impact of the earthquakes in Canterbury.
Annual growth in economic activity is jointly highest in Auckland and the West Coast.
Individually, the West Coast has enjoyed being the top ranked region since December
last year. Auckland was the second fastest growing region two years ago but until
this quarter hasn't topped (albeit jointly) the year-on-year economic growth stakes
since 1995.
September quarter at a glance
- Retail interest rates were largely unchanged in the
quarter.
- The exchange rate was weaker against most of our major
trading partners. The exception was the Australian dollar and the euro.
- Commodity prices edged lower from the peak recorded
in May.
- Business confidence retraced from a high measured in
July, to end the quarter weaker.
- Consumer confidence was unchanged. All the South Island
regions recorded stronger confidence and the majority of North Island regions saw
a drop in sentiment.
- Retail sales rose strongly, underpinned by the build-up
to the Rugby World Cup. The largest increase was measured in Taranaki and the largest
fall in Hawke’s Bay.
- House sales were slightly stronger at the nationwide
level. Northland and Canterbury recorded the largest pick-up in sale numbers over
the quarter and Taranaki the largest fall.
- Dwelling approvals lifted at the national level. Gisborne
led the regions with a surge in the month of August. The next largest increases
were measured in Wellington and Northland.
- Commercial building permits issued fell over the country
as a whole. The Bay of Plenty recorded the largest drop and West Coast the largest
increase, thanks to a surge in the final month of the quarter.
- Employment grew modestly. Auckland recorded the largest
increase, with the series hitting a new high. Northland posted the largest decline,
retracing from a surge in June.
- The unemployment rate ticked up in the quarter. The
South Island recorded a lower unemployment rate.
Northland
House sales in Northland hit an 18-month high, with sales for the September quarter
up by 23 percent from the June figure. Residential dwelling approvals issued in
the region lifted 8 percent from the June quarter, to sit at a twelve-month high.
Accommodation guest nights also rose 8 percent in the quarter, underpinned by a
busy month of July, when the series hit a 3½-year high. Dairy production started
the season strongly and is contributing to a positive level of rural sentiment.
However, confidence across the household sector was not as bright, with sentiment
slipping to the second lowest across the regions, and only marginally ahead of the
lowest ranked region.
Auckland
House sales in Auckland slipped to a seven-month low in September, after reaching
a two-year peak three months earlier. Sale numbers rebounded in October but the
value was the third lowest to be recorded so far over the 2011 calendar year. The
time to sell a house in Auckland remains the quickest across the regions. Employment
in the region posted a strong lift, rising 4.6 percent; but the number of unemployed
rose even faster, resulting in the region’s unemployment rate inching up to 7.5
percent. Job advertising in the region has slipped, with newspaper advertising returning
to levels that prevailed at the start of the year. The volume of Paymark transactions
rose 0.9 percent in the three months to September, with the monthly figure hitting
a new high in October, propelled up by Rugby World Cup related spending.
Waikato
Over the past year businesses and consumers in Waikato have both registered a relatively
high level of confidence, compared to the respective nationwide benchmarks. Employment
and the number of house sales were virtually unchanged compared to modest rises
nationwide. The monthly number of rural real estate sales rose to the highest level
since the end of 2009, with October lifting to a two-year high. A good month of
pasture growth has contributed to a strong lift in rural production. Firms aligned
to the dairy industry remain in a positive space and we are hearing anecdotal reports
of a strong pipeline of work for commercial construction firms.
Bay of Plenty
The Bay of Plenty recorded the largest decrease in the number of commercial building
permits issued in the September quarter. The 24 percent fall in the number of consents
issued in the Bay dragged the quarterly series to its lowest level in 19 years.
Additionally, the number of residential building approvals eased 3 percent over
the past three months. Employment in the Bay slipped 0.4 percent, to hit a twelve-month
low. Internet job advertising eased, contrasting with a modest rise nationwide.
After lifting 14 percent in the June quarter, house sales in the region retraced
5 percent in September. Improving import activity has boosted turnover at the Port
of Tauranga. Retailers in the region have reported weaker than expected trade surrounding
the Rugby World Cup, with efforts now being redirected towards enticing this season’s
cruise ship visitors into the shops.
Gisborne
Accommodation providers have reported a strong rise in guest nights, lifting 20
percent in the three months to September and touching a 2½-year high for the series.
Rural real estate sales were consistent throughout the September quarter, with 28
farms sold, up from 21 sold in the June quarter. Gisborne’s rural real estate market
hasn’t been this active since the end of 2009. The region recorded the largest increase
in residential building approvals in September, lifting an impressive 53 percent
in the quarter. This was underpinned by a surge in the month of August, when approvals
in the region hit a record high. Retail sales lifted 3.5 percent in the September
quarter, to hit a new high for the series. Year-on-year economic growth is the third
strongest across the regions.
Hawke’s Bay
Hawke's Bay recorded a 12 percent rise in house sales in the September quarter.
This lift is off a very slow month in April, when the number of house sales in Hawke’s
Bay touched an eleven-year low. The Bay recorded a lift in business confidence,
but the levels remain below the respective nationwide benchmarks. Following a surge
in June, retail trade in the Bay eased slightly in September. Nevertheless, the
level of sales remains elevated, being the second highest figure on record. Residential
building approvals slipped 3.4 percent, with the months of July and September both
recording softer levels. Commercial building permits fell 16 percent in the September
quarter, ending the quarter with the month of September at a 13-month low.
Taranaki
After surging in the June quarter, house sales in Taranaki returned to more typical
levels in September. Rural real estate sales slipped from 76 in the three months
to June, to 61 in September. Taranaki posted a 4.2 percent lift in employment, as
the number employed rebounded from a five-year low in June. The number of commercial
building consents issued in Taranaki lifted 5 percent from the June quarter, contrasting
a 5 percent drop nationally. Both business and consumer confidence outstripped the
national benchmarks in the latest surveys, with Taranaki recording the third highest
levels for both surveys. This coincided with Taranaki posting the strongest rise
in retail sales in the September quarter, lifting the series to an 18-month high.
Manawatu-Whanganui
Following back-to-back rises, economic activity in Manawatu-Whanganui eased in the
September quarter. A 3.5 percent drop in employment was the third largest decline
and took the series back to a nine-month low. Guest nights dropped 8 percent over
the September quarter, with the monthly figure for September easing to an eight-year
low. Residential approvals dropped 11 percent, with the number of consents in the
month of September hitting a twelve-month low. Commercial building permits issued
in the region eased 15 percent and was only a whisker ahead of a recent low measured
six months earlier. The number of rural real estate sales eased 11 percent, following
a surge of sales in the June quarter.
Wellington
Wellington posted a 2.6 percent drop in employment in the September quarter, pulling
the series down to its lowest level since June 2008. Consequently, the region’s
unemployment rate pushed up to a two-year high of 6.4 percent. Retail trade rose
to a new record high, but the 0.3 percent increase was relatively modest, compared
to the 2.0 percent lift measured nationally. A 0.3 percent drop in electronic transactions
in Wellington contrasted a 0.1 percent lift in the national total. Spending related
to the Rugby World Cup has seen the figure rise 0.5 percent in the month of October,
but this only takes it back to levels recorded in March. Farm sales have surged
to a four-year high in September, lifting 32 percent from the June figure.
Nelson-Marlborough
Nelson-Marlborough's unemployment rate dropped to a 12-month low of 3.7 percent
in September. The number of residential building approvals issued recorded an 8
percent rise in the quarter, lifting the series to a 12-month high. However, the
number of commercial consents issued fell 12 percent, with September the lowest
monthly figure to be recorded during the latest downturn. The number of house sales
retraced in September, after posting a large lift in June. The median time to sell
a house reduced to the quickest time since January 2010. A strong dairy payout and
good wool/lamb prices are creating a positive outlook for the rural community. Dairy
farm expenditures are climbing, but farmers are still looking to contain operating
expenditure. Guest nights rose to a 2½-year high in August.
West Coast
The West Coast recorded a 15 percent lift in commercial building permits, with the
month of September hitting a three-year high. The number of homes sold in the region
surged 13 percent, with August and September jointly hitting the highest monthly
figure since May 2008. The median time to sell a house shortened to hit a 2½-year
monthly low of 46 days in July. Rural real estate sales have eased to 19, from 24
in June. Anecdotally, we have heard that businesses reliant on the tourism sector
have not benefited from the expected Rugby World Cup tourism boost. A drop in guest
nights and electronic transactions appears to confirm this, with respective falls
of 5 and 1.7 percent in September.
Canterbury
Businesses and consumers alike both posted strong expectations in the latest surveys.
The region recorded a large rise in house sales in the quarter, lifting from 1,653
in June, to 2,021 in September. A positive tone was also noted in the rural real
estate market. The number of farm sales lifted 20 percent in September, to post
a three-year high. However, employment in the region dropped 3.8 percent in September,
to sit 8 percent below the pre-earthquake level. Internet-based job advertising
hit a record high in the quarter, so conditions in the labour market may be about
to improve. Internally, we are starting to see a flow of insurance money for significantly
damaged properties, with owners taking the indemnity sum while they decide what
to do. Most have indicated they will invest again but are waiting at least 12-18
months, with the insurance payout being used to reduce debt.
Otago
Businesses in Otago reported some of the highest levels of economic confidence in
the September quarter. Guest nights rose 10 percent in the build-up to the Rugby
World Cup, with the September figure hitting a record monthly high. Employment edged
up 0.2 percent, on a par with the nationwide economy. Households in Otago weren’t
quite as cheery, with consumer confidence in Otago being the lowest across the regions.
The number of house sales slipped 7 percent in the September quarter, but the level
remains close to a two-year high. Manufacturers have reported a pick-up in the last
couple of months, with improving forward orders. The Rugby World Cup has proved
a mixed blessing, with limited financial spill over. Hospitality in the CBD has
benefited, but the anticipated gains never eventuated in other areas.
Southland
Southland recorded a 1.3 percent rise in employment in September, touching a six-year
high for the series. The number of house sales in the region rose a modest 2 percent,
with the median time to sell a house improving from 44 days in the June quarter,
to 38 days in September. The number of residential building approvals issued in
the region was 1 percent weaker in the September quarter, with the monthly number
issued in September dropping to a ten-year low. Commercial construction recorded
an even stronger drop, slipping 13 percent in the quarter. Rural real estate sales
eased 12 percent from a surge in the June quarter, but remains the second highest
number in the past three years. Some farms have reported a difficult spring, with
lamb numbers roughly the same as last year, but stronger dairy production was noted.
The tables can be viewed as charts on our Regional Trends charts
page.
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