Despite a tight job market, surging inflation and talk of a possible recession, Hamilton’s economy continues to perform strongly.

Hamilton City Council’s newly released Quarterly Economic Update provides a snapshot of the city’s economy during the June quarter.

Drawing on information from Council’s rich data sources as well as organisations such as Marketview, the update report reveals Hamilton’s economy to be in good health despite challenging headwinds.

Hamilton’s GDP was $3.1 billion during the three months to June, an increase of 2.8% on the March quarter.

Growth Funding and Analytics Manager Greg Carstens said the picture of Hamilton’s economy was “a little less rosy” when looked at over the entire 2021/22 financial year, with annual GDP falling -0.4% when compared to the previous financial year.

“But when you take into account all the challenges facing our economy, such as inflation, material and labour shortages and COVID-19 disruptions, then you have to say Hamilton’s economy is relatively speaking, strong,” Carstens said.

Electronic card data showed Hamiltonians spent $694 million during the June quarter, with inflation helping push up people’s spending. About 20% of card spending was on petrol and automotive services.

Inflation hit 7.3% in the June quarter which was higher than expected and very high when compared to the past 30 years. However, there was a growing consensus among forecasters that inflation had peaked, and would gradually come back down during the next two years.

“Inflation is cummulative,” Carstens said, “so even when inflation slows, the price increases are baked in.”

Employment increased 1% in the June quarter, up 4.4% across the 2021/22 financial year. This was a reflection of the tight labour market and the high number of jobs available in the city.

The country’s last recession happened during the Global Financial Crisis (GFC). Only four of Hamilton’s top six industries experienced a brief drop in GDP during that period. Even if the New Zealand economy did go into a recession, it’s not a given that Hamilton’s would follow suit.

“At the moment, our projections for Hamilton are that we won’t go into a recession,” Carstens said.

“But one of the things that COVID-19 has taught us is that things can change really quickly. If we did go into a recession, our information indicates that it will be relatively shallow so it wouldn’t have a fundamental effect on Hamilton’s economy.”

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