13 June 2016

First quarterly economic growth slows but outlook stronger

The latest Manawatū Quarterly Economic report suggests that economic growth in the Manawatū region slowed in the first quarter of this year but the outlook for growth is looking much stronger.

Infometrics GDP estimates suggest economic growth in the region was 0.9% in the year to March 2016, while GDP is estimated to have increased by 2.3% nationwide.

The Infometrics model for estimating GDP uses a range of indicators to provide the latest estimates of economic activity but these are revised as more historical data is released.

Two factors influencing the March 2016 quarter GDP estimates for the region are weak commodity prices and subdued retail spending in Palmerston North and Feilding.

The weakness in retail spending is occurring in supermarket and fuel spending, due to competition from a new retail development in the Rangitikei town of Bulls. However, data recently purchased by the Council shows Broadway and the rest of the Palmerston North CBD is performing well.

Palmerston North CBD electronic card retail spending in the March quarter (excluding supermarkets and other food store retailing) was 4.7% up on the March 2015 quarter while Broadway retail spending increased by 6.8%.

There are further signs of employment growth in the region. The number of Manawatū residents receiving the MSD job seeker benefit declined by 2.3% from March 2015. Net overseas migration in the region resulted in a net gain of 692 people in the year to March 2016 compared with a net gain of 572 people in the year to March 2015.

Palmerston North GDP is estimated to have increased by 1.0% in the year to March 2016 while Manawatū District GDP is estimated to have increased by 0.3%.

Palmerston North City Council Chief Executive Paddy Clifford says that the outlook for economic growth in the City has improved significantly since the March quarter. The Council approved 35 consents for new houses in May, the highest monthly total since May 2008.

“The total value of residential and non-residential building consents approved by the Council in the year to May 2016 was $154 million, the highest annual total since early 2009. We expect this to increase further once consents that are being processed by the Council are approved,” says Mr Clifford.

The Manawatū Region Quarterly Economic Monitor is produced by Infometrics for Palmerston North City Council and a copy of the full report can be found at pncc.govt.nz.

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