Local Govt | National News Video | Parliament Headlines | Politics Headlines | Search


Employment rebounds, but all eyes on inflation

Employment rebounds, but all eyes on inflation

The Auckland economy is estimated to have grown 2.9 per cent year-on-year in the December quarter, taking growth through the year to 2.8 per cent. This is on par with the growth achieved through calendar 2012.

Three factors which will play a key role in determining the strength of employment and economic activity through 2014 will be net migration, consumer confidence and inflation, says Auckland Council’s Chief Economist, Geoff Cooper.

“Sustained high migration levels and a less cautious household sector could drive stronger spending and employment outcomes but, with inflationary pressures on the rise, this could well trigger a more aggressive interest rate tightening phase.”

The unemployment rate dropped to 6.3 per cent in the December quarter, the lowest quarterly result since the December quarter of 2008. “The rebound in employment was enough to offset a significant jump in the labour force – underpinned by rising participation levels and strong net migration figures,” says Mr Cooper.

Annual regional CPI inflation firmed to 1.5 per cent in the December quarter, having accelerated through the September quarter. Construction cost inflation has been the key contributor to the stronger headline result, with wage pressures still contained; but with the process of absorbing spare capacity now largely complete, and labour markets tightening, household inflationary expectations are on the rise.

Annual house price growth remains buoyant but sales volumes continue to decline. “The LVR limits have significantly constrained housing demand and their effect will be compounded by rising interest rates through 2014; however, demand is currently being bolstered by exceptionally high levels of net migration, which together with rising household incomes will help cushion house price growth.

“Net migration has the potential to boost housing activity in Auckland through 2014, but the major driver of construction cost inflation nationally is the Canterbury rebuild which continues to ramp up,” explains Mr Cooper.

Auckland’s economic growth has become increasingly broad-based: the upswing in housing construction is now having significant flow-on effects for other sectors in the economy, particularly manufacturing; consumer spending has gained momentum; and the external sector has been bolstered by strong visitor numbers and dairy prices and – to date – proved resilient in the face of a high NZ dollar and weakening Australian economy.

Excess capacity has now been largely absorbed and businesses have been taking on additional labour to cater for projected demand, but the outlook for employment growth is dependent on the strength of domestic activity – particularly housing activity and consumer spending – going forward.

“On balance, the outlook is for solid employment growth and a further decline in the unemployment rate through 2014 back towards 5.0 per cent. However, there are plenty of upside and downside risks to this outlook – both domestic and external”.

To view the latest Auckland Economic Quarterly, or archive editions, visit aucklandcouncil.govt.nz/chiefeconomist [latest edition available online from 11.00am Thursday 10 April].


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines


Werewolf: Safe Landings Gordon Campbell on the safety challenge to the Wellington runway extension.

The safety-related legal challenge revolves around the size of the 90 metre long Runway End Safety Area (RESA) being proposed for the runway extension. More>>


Environment Commissioner: We Need To Work Together On Climate Change And Farming

“The debate around agricultural emissions and the ETS has been polarised for too long,” said the Commissioner. “But the ETS is not the only way forward – there are other things that can be done.” More>>


NZ Super Fund: Seeking To Put A Market Price On Climate Change

Oct. 19 (BusinessDesk) - The New Zealand Superannuation Fund says it will devise a set of rules to assess investment winners and losers under climate change, a strategy that could rule out fossil fuels or producers such as current portfolio member Exxon ... More>>


Rejuvenation: Parata Will Not Contest 2017 Election

Education Minister and National List MP Hekia Parata has today announced that she will not be contesting the next election. She advised the Prime Minister of her decision earlier this year. More>>

Prisons Grow: Government Approves Plans For Increased Prison Capacity

Despite significant progress in reducing crime the number of prisoners has increased faster than projected. This is because the proportion of offenders charged with serious crimes has risen, meaning more people are being remanded in custody and serving more of their sentences in prison. More>>


Gordon Campbell: On Plastic Bag Activism, And Street Harassment

Amusing to see the Act Party experiencing another outbreak of young fogey-ism. What has aroused the ire of Act Leader David Seymour this time is the introduction of a Greens private members bill to the ballot process, calling for a 15 cents levy on plastic bags to reduce pollution. More>>


Unclear Weapons: US Navy Ship Cleared To Visit NZ For Navy's 75th

United States Navy ship, the USS Sampson, has been given clearance to visit New Zealand next month by Prime Minister John Key... “The process for considering the visit by the USS Sampson is the same as that used for all ships attending the International Naval Review." More>>


P Policy: $15m Allocated To Tackling Drug Abuse

Almost $15 million dollars seized from criminals will be invested in anti-drug initiatives, with more funding for Police and Customs and a greater focus on treatment for drug abusers, Prime Minister John Key says. More>>


More Or Less Democratic Countries: Fiji Prime Minister To Visit NZ

“This will be Prime Minister Bainimarama’s first official visit to New Zealand as Fiji’s Prime Minister,” Mr Key says. “New Zealand and Fiji have strong ties in a range of areas, and the Prime Minister’s visit presents a further opportunity to discuss issues of mutual interest.” More>>


Get More From Scoop



Search Scoop  
Powered by Vodafone
NZ independent news