Buoyant Coromandel economy according to newly released data

The Coromandel economy grew by 3.3% in 2016, and the indicators are that spending and investment is set to continue, according to the latest data provided by Infometrics, an independent company that provides economic analysis and forecasts.

"We’re extremely pleased to see these positive trends for our District, but it also shows that we need to have strong strategies and solid planning in place so we can respond effectively and efficiently," says Mayor Sandra Goudie. "That's why a major focus for us is about land zoning and planning, as well as maintaining and developing our core infrastructure including roading, water and wastewater."

The Coromandel's tourism sector enjoyed a bumper 2016, with data showing that visitor spending totalled $337M in 2016, up 7.7% from its 2015 level. International visitor spending climbed 19% to $83.5M in 2016, while spending by New Zealand visitors grew 4.4% to reach $254M.

A buoyant housing market has seen pressures mount within the Coromandel, with both rent and house price growth elevated. Infometrics data for the December quarter saw rental inflation reach 9.5%pa in our District, which is an all-time high.

Meanwhile data for the December quarter saw the average house price for Thames-Coromandel increase 14% (national average was an increase of 13%). The average house price in our District is $604,872, while the national average house price is $607,808.

Housing market pressures are also creating incentives to build, with home building consents rising 41% on the Coromandel over the past year. A shortage of skilled and unskilled construction workers across the upper North Island is also still creating capacity issues, which also affects our District.

In 2016 we saw the national average for residential consents increase by 10%, while in the Coromandel it was a staggering 41% increase. For non-residential consents the national average was 1.7%, while the average for our District was 22%.

Infometrics also produce a Regional Economic Profile which shows that employment growth has been strong in Thames-Coromandel, with the number of filled jobs climbing 3.0% (350) in the March 2016 year. Accommodation and food services added 120 jobs, not surprising given the tourism sector’s recent good performance.

Other key contributors included administrative and support services (110 jobs) and construction (100 jobs).
This data also sheds light on where in our District this job creation occurred.

Employment in Mercury Bay rose by 157 to a total of 3,179, job numbers, in Coromandel-Colville it climbed by 132 to 1,253, and in Thames employment increased by 29 jobs to reach a total of 5,211. Tairua-Pauanaui (up 2 to 752) and Whangamata (down 8 to 1,488) both had relatively static job numbers.

Some other performance indicators from the Infometrics data includes:

• Our resident population grew 2.2% to 28,400, compared with the national average of 2.1%. 700 came to the district in 2016 while 100 left.

• Industry within the Coromandel showed log prices rose to a record level in February, while seafood export prices climbed through 2016.

• Wholesalers in Thames that rely on spending by dairy farmers are likely to see a slight increase in activity in 2017 due to an increase in the farmgate milk price of more than 50% from its 2015/16 level. Even so, farmers’ first priority will be reducing debt levels so any spending lifts will be modest.

You can read the Infometrics December quarterly report for Thames-Coromandel here and Infometrics Economic Profile for Thames-Coromandel here.

Overview of the national economy

Infometrics also provide an overview of our national economy which show that economic growth continues to accelerate, net migration is refusing to peak, and interest rates are still at a low level, which means demand has risen throughout much of the country across a range of indicators.

This situation has put renewed pressure on capacity, and firms across a broad cross section of the economy have increasingly been complaining about the difficulty of finding labour and its effect on their ability to expand their business. Such supply-side issues have not been on the radar since 2007/08, before the Global Financial Crisis resulted in a swathe of excess capacity across both the New Zealand and global economies. If these issues continue to mount, then inflationary pressures and the prospect of rising interest rates will increasingly be on decision-makers’ radars.

What to watch

Auckland is New Zealand’s engine and is expected to outperform the national economy over the next four years, according to Infometrics Regional Perspectives report released today.
“Nearly 85,000 new jobs are expected to be created in Auckland by March 2021,” says Infometrics Chief Forecaster Gareth Kiernan.

The Infometrics Regional Perspectives report provides an outlook for economic conditions in New Zealand’s regions and industries over the next four years.

“The report highlights that Auckland’s job creation will be strongest in professional, scientific and technical services (16,450 new jobs), health care and social assistance (11,050 new jobs), and education and training (8,200 new jobs),” says Mr Kiernan.
Another sector to watch is health care and social assistance, particularly given the aging population.

“Growth in health spending in New Zealand could rise more quickly in the near-term given the tightening political race for this year’s election,” says Mr Kiernan.

“A boost to government spending would acknowledge the pressures imposed by rapid population growth and lead to increased capacity in the health system, including a lift in overall employment.”

“Of the 30,900 additional jobs created in the health care and social assistance industry over the next four years, we expect just over half to be in Auckland (9,900 jobs), Wellington City (2,000 jobs), and Christchurch (3,300 jobs),” says Mr Kiernan.

“Outside the three largest cities, Hamilton (2,000 jobs), Tauranga (1,300 jobs), and Dunedin (1,000 jobs) will also record significant increases.”

Provincial centres with hospitals offering mid-level medical care to a catchment that extends well beyond the town in question, will also benefit from the industry’s growth.

“The grey wave of aging baby boomers represent not only a political bargaining chip, but caring for these people will be one of the key sources of employment growth in provincial centres over the coming years,” concludes Mr Kiernan.

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