Growing Momentum In Canterbury Activity
ASB Cantometer Index
EMBARGOED UNTIL 5AM WEDNESDAY 23 JANUARY 2013
ASB CANTOMETER INDEX SHOWS GROWING MOMENTUM IN CANTERBURY ACTIVITY
• Construction activity continues
to build, boosted by increase in non-residential consents.
• Lifts in retail spending and consumer confidence suggest activity is broadening beyond construction.
According to the latest ASB Cantometer index, activity in the Canterbury region lifted significantly last month, increasing to 0.5 from 0.2, suggesting activity is now firmly above pre-quake levels. Much of the improvement stems from the consumer spending index, which has lifted to +0.3 from -0.8 based on data released over the past month.
ASB Chief Economist Nick Tuffley says, “The Christchurch Retail Trade Indicator revealed further recovery in retail spending over Q3, with the quarterly pace of Christchurch retail spending growth outpacing that of the rest of the country.”
Mr Tuffley says there are other positive indicators also, “In addition, there was a sharp improvement in Canterbury consumer confidence over Q4. The continued recovery in these areas suggests economic activity is starting to broaden beyond construction.”
“We expect Canterbury reconstruction activity to continue to underpin the nationwide lift in residential construction over the coming year,” says Mr Tuffley. “However, the Q3 GDP figures released just before Christmas suggest there is less momentum in support industries (such as professional services) than previously thought.”
“In light of indications of less momentum in the wider economy and subdued inflation pressures we now expect the RBNZ will leave the OCR unchanged until March 2014,” concludes Mr Tuffley.
About the Cantometer
The Cantometer is designed to summarise activity in Canterbury. The study takes a range of publically available regional economic data, which is standardised and aggregated into a summary measure. The index has been rebased to zero in June 2010 (the end of the quarter immediately preceding the first earthquake) such that a positive number represents activity being above pre-earthquake levels.
Along with the aggregate Cantometer
index, there are five sub categories: Construction, Housing,
Employment, Consumer spending and Miscellaneous*.
These sub-indices will provide some insight into which sectors are driving the rebuild activity at a given point in time.
For most activity the data reference the level of activity. However, when incorporating wages and house prices into the index we believe levels are less informative. Instead the index uses prices relative to the rest of the country. An increase in relative prices is a signal for resources to be reallocated to the Canterbury region.
The historical Cantometer series represented on the charts is a simple average of the complete set of data for each month.
*The miscellaneous category includes electricity, car registrations, guest nights and permanent and long-term net migration. A common factor driving these areas will be population growth, and we expect all these indicators to increase as the rebuild gathers momentum.