Construction activity pushes Cantometer to a new high

Monday, 30 June 2014, 11:26 am
Press Release: ASB Bank

30 June 2014

ASB Cantometer Index: Construction activity pushes Cantometer to a new high

• The ASB Cantometer rose to 1.5 in June
• Canterbury retail spending outstrips the national level
• Tourism numbers steadily climbing as Christchurch Airport becomes the fastest growing entry point for Chinese visitors

ASB’s Cantometer index rose to 1.5 in June, hitting a new all-time high of 1.53 before rounding, compared to the previous high of 1.46.

“The largest improvement in recent data was the Q1 Building Work Put in Place survey, which showed a strong increase in regional construction activity,” says ASB Chief Economist Nick Tuffley. “Residential construction increased 31% in Canterbury over Q1, while non-residential construction was up 16%.”

“The encouraging data is not solely construction-related though,” says Mr Tuffley. “Over the last year, retail spending has risen by 7.9% in Christchurch – far outstripping the 3.5% increase nationally.”

Canterbury’s tourism industry also continues to rebound as demand returns.

“Guest nights figures are continuing to climb steadily as lost accommodation capacity is restored. Christchurch Airport is now the country’s fastest growing point of entry for Chinese visitors, a vital growth market.”

Outlook
The improvement seen in the Canterbury economy is showing no sign of slowing down concludes Mr Tuffley.

“The rebuild momentum has taken longer to kick in than initially expected, but recent construction data shows that the ball has really started rolling now. This is working to create a healthy economic environment, with very low unemployment and strong growth in spending flowing through to benefit other sectors of the 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.

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ENDS

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