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ASB Regional Economic Scoreboard Q2 2019
Gisborne’s time to shine
After climbing ten places to take out bronze last quarter, Gisborne has rocketed into first place, wresting gold from the Hawke’s Bay which had held the medal for two successive quarters.
Construction and housing have boosted the region this quarter, with annual growth in construction hitting 41% and house prices up 13.2%.
“The Gisborne housing market is on fire, with both house sales and house price growth topping the nationwide ranks over the quarter,” says ASB chief economist Nick Tuffley.
The region also took out top spot in retail with 8.7% annual growth in retail sales. Tuffley says by industry, Gisborne has been on a solid run with its diverse mix of export industries.
“The one storm cloud on the horizon is the recent weakening of log prices - that aside, it is definitely Gisborne’s time in the Sunshine and worth celebrating with a local beer,” says Tuffley.
Wellington noses into second place after a consistent run
Wellington has climbed two places into silver medal position, holding onto its five star status after a consistent performance in recent quarters.
“The economic drivers remain similar to recent quarters, with the strong labour market probably the outstanding feature,” says Tuffley.
“The housing market is not far behind as annual house price growth is still comfortably above 10%.
The region climbed one spot last quarter with a strong labour market helping its stable performance.
“Looking beyond the quarter and as Wellingtonians are the most optimistic in the country, we anticipate that the Capital could challenge for top spot over the next couple of quarters,” says Tuffley.
Northland races 10 places ahead into bronze
Northland has more than made up for its seven place drop last quarter, climbing ten spots to third on the Scoreboard.
Despite its pace and bronze medal, Northland hasn’t claimed a coveted five star status this quarter.
“Given the scale of the move, we are a little wary, so have only bumped up Northland to a four-star rating. Another good result next quarter would see us add the remaining star,” says Tuffley.
The key areas of strength for the region were guest nights and car sales growth, with Northland topping both categories nationwide.
“We also suggest that Northland’s diverse industry base is serving it well, particularly as the horticulture and beef sectors perform well.
“On this basis, we anticipate that Northland has a better-than-fair chance of claiming that sought-after fifth star next quarter and potentially a different colour medal to go with it,” says Tuffley.
The Bay of Plenty and Manawatu-Whanganui hit speed bumps
After sitting at 8th and 2nd place respectively last quarter, The Bay of Plenty and Manawatu-Whanganui have slid back seven places each to 15th and 9th.
According to Tuffley however, the fall in
fortune for both may not last long.
“We still view the Manawatu-Whanganui economy on a glass half-full basis. In particular, there’s still reason to be cheery around the local housing market and around the performance of the sheep and beef sector.
“Indeed, we expect that most farmers will be looking forward to spring in the region,” says Tuffley.
“We must admit, we are a little bemused by the Bay of Plenty’s result. Nonetheless, like its neighbour, Waikato, consumer confidence is well down, so something is bugging Bay of Plenty locals.
“Perhaps it’s the traffic, particularly around the Mount as road construction drags on. For our part though and with a generally strong industry outlook, we don’t expect the region to stay down for long,” says Tuffley.
The West Coast remains in the doldrums, slipping from 15th to last place
The West Coast has fallen one more spot after dropping two last quarter, sliding into last place on the Regional Economic Scoreboard.
The region’s construction pipeline is soft, with building consents issued falling over the year – at odds with the rest of the country where annual residential consent numbers are at their highest since the mid-1970s. Despite the West Coast’s current placing, Tuffley is optimistic about its outlook.
“With the Westland Milk takeover confirmed, the cash injection that this provides may see spirits and activity lift on the Coast over coming quarters,” 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
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