Consumer confidence drives small dip in Cantometer Index

Wednesday, 29 October 2014, 12:13 pm
Press Release: ASB Bank

Media release

ASB Cantometer Index

EMBARGOED until 0500 Wednesday 29 October

Consumer confidence drives small dip in Cantometer Index

• ASB Cantometer Index eases slightly from last month’s record high

• Consumer confidence dips to just below pre-earthquake levels

• Positive industry developments boost outlook for Tourism sector

The ASB Cantometer Index dipped slightly this month to 1.8, down from its record high of 1.9 the previous month.

“The slight dip in October’s Cantometer is due to a decline in consumer confidence in the region, which is now at levels below those seen before the earthquakes,” says ASB’s Chief Economist Nick Tuffley.

“Despite this minor hiccup, all other activity indicators continue to paint a strong picture. In particular, stronger house-building demand and non-residential building demand is continuing to drive a rise in the construction sub-index.”

Recovery in the tourism sector has been gradual, but with further growth on the horizon.

“International arrival numbers into Christchurch airport are lifting, though not quite as strongly as the national pace. Total guest nights in the region are remaining constrained by lower accommodation capacity. Positive industry developments including increasing international flight numbers bode well for the region’s summer tourism season.”

Outlook

Construction growth, in particular non-residential construction, will remain the key pillar supporting Canterbury’s economic performance over the coming year says Mr Tuffley.

“With strong residential construction pumping a fresh supply of new houses onto the market, we expect moderation in Canterbury house price inflation to around 3.5% by the end of 2016.”

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 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.

If you would like to receive ASB updates and reports by email: https://reports.asb.co.nz/register/index.html

Note to editors
This edition of the ASB Cantometer index is embargoed until 5am on Wednesday 29 October 2014. The full report is attached and will be available online.

ENDS

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