Canterbury consumers crack open their wallets

Monday, 31 March 2014, 1:26 pm
Press Release: ASB Bank

28 March 2014

Canterbury consumers crack open their wallets

• The ASB Cantometer hit a new high of 1.4 in March.
• Retail sales rose by 8.7% over 2013.
• Consumer confidence is soaring, second only to Auckland.

The ASB Cantometer index edged up to a new high of 1.4 in March, largely as a result of strong data on consumption.

“A range of indicators improved over the last few weeks, but the most obvious gains were in retail sales and consumer confidence in the region,” says ASB Chief Economist Nick Tuffley.

“The Retail Trade Indicator showed an 8.7% increase in sales over the year to December 2013,” Mr Tuffley explains. “That compares very favourably with an estimated 3.8% lift nationally. In addition, consumer confidence in Canterbury is soaring, second only to Auckland.”

Meanwhile, strong migration inflows continue to boost activity. “Net international migration showed an inflow of 5,088 people to the Canterbury region over the year to February,” says Mr Tuffley. “That is the strongest annual inflow since the data began in 1990 and will provide much-needed workers for the rebuild effort.”

Outlook
The continued improvement in the Cantometer Index reflects broadening economic activity, says Mr Tuffley. “Higher retail spending is a result of population growth, low unemployment and rising confidence – all of which are stemming from the rebuild. It’s really a textbook example of how the rebuild is spreading to other sectors of the regional economy.”

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About the Cantometer
The Cantometer is designed to summarise activity in Canterbury. The study takes a range of publically 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) 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.

Click here for the full report.

ENDS

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