ASB Cantometer index shows further lifts in Canterbury

Tuesday, 18 December 2012, 10:37 am
Press Release: ASB Bank

Media alert – ASB Cantometer index shows further lifts in Canterbury activity.
18 December 2012
• Construction activity continues to drive improvement in Canterbury activity.
• Lift in housing market activity is encouraging, with renewed interest in earthquake-damaged areas.
The second edition of the Cantometer, ASB’s new composite index of Canterbury activity, shows a lift in Canterbury activity underpinned by further improvement in construction.
The Cantometer snapshot, at 0.2, indicates aggregate activity remains above pre-earthquake levels.

ASB Chief Economist Nick Tuffley says, “Canterbury construction activity increased 34% over the 3rd Quarter, suggesting the rebuild is now making some meaningful progress. In addition, building consents remain firm, indicating further activity is in the pipeline.

“The recent lift in housing market turnover is another encouraging sign of progress in the region. As uncertainties have reduced, real estate agents have noted a renewed interest in earthquake-affected areas.”

Mr Tuffley adds, “Other indicators remain steady and still below pre-earthquake levels, highlighting that activity beyond the construction sector in Canterbury is more subdued at present. Over time, we are looking for lifts in these areas as a sign of increased confidence and employment in the region.”

Outlook

“We expect Canterbury reconstruction activity to underpin the nationwide lift in residential construction over the coming year,” says Mr Tuffley.

“At the December MPS, the RBNZ noted the recent progress made toward the Canterbury rebuild. However, the RBNZ also indicated increased concern over the upside risks to inflation stemming the rebuild. Over the coming year, the inflation pressures will become more apparent and we expect the RBNZ will begin to increase the OCR from September 2013,” concludes Mr Tuffley.

About the Cantometer

The Cantometer is designed to summarise activity in Canterbury. The study takes a range of publically available regional economic data, which is 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 electricity, 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.

ENDS

The embargoed report is attached with graphs and tables in PDF format
http://img.scoop.co.nz/media/pdfs/1212/Embargoed_ASB_Cantometer_December_2012.pdf

© Scoop Media

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