ASB Cantometer Index
EMBARGOED until 5am Wednesday 30 July
Construction activity again pushes Cantometer to fresh high
• The ASB Cantometer rose to a fresh high of 1.6 in July.
• Non-residential building consents continue to improve while dwelling consent issuance could be starting to plateau.
• Continued recovery in Canterbury’s tourism sector.
The Cantometer index rose to a fresh high of 1.6 in July (versus the previous high of 1.5 in June).
“Construction demand remains strong, and continues to be a key driver of economic growth in the region,” says ASB Chief Economist Nick Tuffley. “Particularly encouraging is the lift in non-residential building consents, reflecting continued earthquake rebuilding activity and higher business confidence.”
“Construction growth has flowed through to stronger demand in other areas” says Mr Tuffley. “Car registrations lifted 33% over the past year, as consumers feel more confident about making big-ticket purchases.”
The region’s tourism industry also continues to recover. Mr Tuffley explains, “The high number of passenger numbers passing through Christchurch Airport bodes well for the region’s tourism industry.”
There are emerging signs that dwelling consent issue in Canterbury may be starting to flatten.
“A further softening in the Housing sub-index this month is a reflection of the fall in the number of house sales. While house prices in Christchurch continue to increase and are 7.3% higher for the year to March, the pace of annual house price growth is sitting just below the national average.”
Construction growth should continue to lead Canterbury economic activity over the next couple of years, says Mr Tuffley.
“We expect the earthquake rebuild will continue to encourage workers to move to Canterbury, as well as boost further employment demand.”
About the Cantometer
The Cantometer is designed to summarise activity in Canterbury. The study takes a range of publicly available regional economic data, which are 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.
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