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ASB Regional Economic Scoreboard Q1 2019


Tuesday 4 June 2019

Winter may be coming but the North is heating up

• The sunny Hawke’s Bay tops the Scoreboard for the second quarter in a row

• The central North Island dominates with the Hawke’s Bay, Gisborne and Manawatu-Whanganui taking out the medals

• Gisborne was this quarter’s fastest mover, jumping a massive 10 spots to 3rd

• Canterbury was this quarter’s biggest loser, dipping 10 spots to 14th

• Marlborough props up the bottom of the Scoreboard

Good times roll on in the sunny Hawke’s Bay

The Hawke’s Bay remains king of the Scoreboard castle, holding onto its gold medal for the second quarter in a row.

Posting solid numbers across the board, the Bay topped the charts in guest night growth and new car sales – one of just two regions to post positive numbers for annual car sale growth alongside Manawatu-Whanganui.

With strong housing and retail sectors continuing to boost the Bay, fortunes could remain rosy in the region for a while to come, according to ASB chief economist Nick Tuffley.

“Looking ahead, we see solid momentum for most of the Bay’s industries and hence we would be loath to bet against the region notching up a hat trick of Scoreboard gold medals,” says Tuffley.

The Central North Island heats up

Hawke’s Bay, Manawatu-Whanganui and Gisborne have dominated the scoreboard this quarter, taking out the gold, silver and bronze medals, respectively, followed closely by Wellington in fourth.

All four regions managed to claim a five-star rating, helped no doubt by double-digit annual house price growth in each area. For Manawatu-Wanganui, topping the annual job growth stats helped it jump from bronze last quarter to silver.

“The region’s cash registers rang hot over the quarter as well,” says Tuffley.

“For the remainder of 2019, we expect the healthy agricultural outlook to translate into healthy results on the Scoreboard. Thus, the million dollar question becomes: can the region claim a gold medal at some stage this year?” says Tuffley.

“Looking at Wellington, the region remained fairly stable, climbing one spot this quarter. The economic drivers remain similar to recent quarters, with the strong labour market probably the outstanding feature,” says Tuffley.

“Looking beyond the quarter and with the Government’s foot still on the fiscal gas, we anticipate the Capital’s economic ‘wellbeing’ is likely to remain strong over the rest of the year,” says Tuffley.

Gisborne takes out ‘most improved’ rising 10 places.

The first city in the world to see the sun, Gisborne is shining this quarter after climbing a solid ten places into third, claiming a five-star rating along with its bronze medal.

Construction in the region was up 48% annually, with house prices up 13.2% annually – the highest across the country.

“Gisborne topped the nationwide stats on building consent issuance and annual house price growth. The region’s retail sector also fired over the summer months. As a result, we’ve bumped Gisborne up to a five-star rating and anticipate that the good times are likely to roll on over the remainder of the year.

Canterbury’s four-star status short lived as it falls 10 places

After spectacularly climbing eleven places last quarter, Canterbury has slid right back down the ranks to 14th on the Scoreboard.

“Canterbury’s economic performance is not quite as emphatic and consistent as the region’s super rugby team, down from 4th to 14th,” says Tuffley.

“The region is still working through the transition from past strong construction growth to the traditional drivers. Employment has been soggy after five years of robust growth and, unsurprisingly, retail spending has been subdued,” says Tuffley.

“The housing market is in an interesting spot. Prices have been weak. But sales turnover growth was 3rd fastest over the year, and contrasted with outright declines in most other regions. The number of homes for sale has fallen over the past six months, another sign the market may be turning the corner. The Auckland market (and Blues) can only look at Canterbury wistfully,” says Tuffley.

Marlborough in the doldrums at the bottom of the scoreboard

A lack of solid numbers on the board has seen Marlborough’s soft patch continue, with the region sliding one place to the bottom of the table.

Retail growth is slow at just 2.2% annually and construction has pulled back from its 2017 surge.

“There is nothing particularly bad happening within the region, it is just missing out on the food and forestry bandwagon that many other regions are riding,” says Tuffley.

“For example, one key wine market, the UK, is afflicted with a weak exchange rate amidst Brexit confusion. Hopefully Theresa May drowns her sorrows (or toasts with relief) with a good Marlborough drop,” says Tuffley.

The full ASB Regional Economic Scoreboard, along with other recent ASB reports covering a range of commentary, can be accessed at our ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html

@ASBBank @ASBMarkets www.asb.co.nz

ENDS


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