ASB Cantometer Index
New high for the Cantometer on the back of solid employment demand
• ASB Cantometer rises to another
high of 1.8 in August.
• Stronger labour market the key driver.
• Construction growth continues to provide added support.
The ASB Cantometer Index rose to a fresh high of 1.8 in August (versus the previous high of 1.6 in July) and this month it’s the labour market that is driving the growth.
ASB Chief Economist Nick Tuffley says improvement in the Canterbury labour market was seen across strong growth in employment, hours worked and wages.
“Employment demand in the region has been boosted by the earthquake rebuild, and we are seeing signs of this demand flowing through to wage pressures,” Mr Tuffley says.
“Continued construction growth remains a key support of Canterbury economic activity. Stronger residential and non-residential building demand is underpinning a lift in sales of ready-mix concrete.”
Canterbury housing market activity remains fairly steady overall, Mr Tuffley says. Although house sales lifted slightly in recent months, the region’s housing market remains very tight.
“Having recorded very strong migration inflows into Canterbury over much of 2014, there has been a slight easing in July. However, we expect the earthquake rebuild will continue to encourage workers to move to Canterbury over the coming year.”
Construction growth should continue to underpin Canterbury economic activity over the next couple of years, says Mr Tuffley.
“In particular, we expect the earthquake rebuild will support further employment growth in Canterbury over the remainder of 2014.”
About the Cantometer
The Cantometer is designed to summarise economic activity in Canterbury. The index 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) which means 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 provide 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. But when it comes to incorporating wages and house prices into the index, we believe that measure is less informative, so the index uses prices relative to the rest of the country instead. 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. Population growth is a common driver of these activities, and we expect all these indicators to increase as the rebuild gathers momentum.