Economic snapshot: Hawke’s Bay growth continues

Outperforms national economy on many measures

Napier, 6 March 2019 – Solid provisional regional GDP growth that again outstripped the national economy, strong contributions from horticulture and hospitality, population growth buoying housing demand and a robust labour market. These are the factors driving the Hawke’s Bay economy according to Infometrics’ Quarterly Economic Monitor – Hawke’s Bay Region, December 2018*.

The Hawke’s Bay economy continues to perform well, says Carolyn Neville, CEO of Business Hawke’s Bay.

“Price and volume increases for pip fruit exports, new cargo records being set by Napier Port, an increase in consumer spending, a booming construction industry, a buoyant housing market and unemployment at a 10-year low.

“Hawke’s Bay businesses are prospering and that bodes well for the region.”

Key regional highlights include*:

Provisional GDP growth estimate 3.1% compared to 2.7% nationally

Regional unemployment fell from 6.3% last year to 4.1% (a 10 year low) compared to 4.3% nationally

Electronic card spending on retail purchases up 6.4% compared to 4.5% nationally

House prices up 15.7% compared to 2.3% nationally

Number of residential consents for the quarter up 21% compared to the Dec ’17 quarter

Growth in value of non-residential consents up 22.8%

Commercial vehicle registrations up 2.5% compared to 1.6% nationally

Tourism spend was $644m, up 1.2% on the prior year.

*all 12 months to December 2018 unless otherwise stated

The year to December 2018 has been one of growth and confidence across a range of key measures.

GDP

Provisional regional GDP for the 12 months to December 2018 was up 3.1% on the prior year and higher than the national average of 2.7%. Annual GDP growth in Hawke’s Bay peaked at 4.0% in the year to September 2016.

Unemployment rate – big improvements and outperforming the national average

Hawke’s Bay’s annual unemployment rate has fallen from 6.3% to 4.1% in the past year, and is at a 10-year low, says Carolyn Neville.

“The regional economy continues to do well, which leads to job creation and a reduction in the unemployment rate, making for a tight labour market. This current snapshot is before the key grape and apple harvests, so I would expect the unemployment rate might fall even further in the quarter to come.

“We know that we have a real challenge over the next few months to get all the apples picked, and our pip fruit operators have good reason to be concerned as a record harvest is expected.

“A long term solution to this problem needs to be found.”

Residential and non-residential building consents both on the rise

One hundred and fifty three new residential building consents were issued in the December 18 quarter, up from 126 for the same quarter last year. On a 12-month basis, the number of consents was up 5.8%, compared to a 6.1% increase nationally.

Non-residential consents were more robust, with the value of consents up 22.8% to $151 million for the year to December 2018, well above the region’s 10-year average of $112 million and comparing favourably to the national growth for the year of 9.0%.

Real estate: double digit growth in average price outperforms national average, number of sales increases to 20% above 10-year average, average value sits a <70% of national average

The regional real estate market experienced strong price and volume growth. House prices increased by 15.7% for the 12-months to December, and the average sale price was $468,736. Nationally house prices increased by 2.3% and the average sale price was $680,063.

The number of houses changing hands increased by 6.3% for the year to reach 2,856, well above the regional 10-year average of 2,399.

Carolyn Neville says that Hawke’s Bay house sellers are now asking for some of the highest house prices in regional New Zealand.

“Hastings and Central Hawke’s Bay are posting record median prices (realestate.co.nz). High house prices are great for home owners, but they can be a real constraint to growth and attracting workers to the region.”

Infometrics says that housing markets outside Auckland are still in catch-up mode, and expect house prices to fall nationally in 2019 as greater supply in the regions pushes prices down and sellers re-evaluate asking prices in order to achieve a sale.

Vehicle registrations

Car registrations decreased 1.9% over the year, compared to a national decline of 6.7%. A total of 6,269 cars were registered in Hawke’s Bay in the past 12 months, 35% above the 10-year average. Commercial vehicle registrations increased by 2.5%, outstripping national growth of 1.6%.

Guest nights

Tourists spent an unprecedented $644 million in Hawke’s Bay, up from $636 million a year ago. Commercial guest nights fell by 2.9% (still remain significantly above the 10-year average), compared to a 2.3% increase in guest nights nationally.

Infometrics forecasts that stronger wage growth and near full-employment will push up demand for recreational travel and with it, domestic guest nights.

Softer growth is expected in international guest nights; arrivals from Asia fell in the December quarter. Reports of strained diplomatic relations between New Zealand and China present real concerns about future tourist numbers from China, and more difficult global economic conditions could undermine visitor numbers from the UK and US.

Retail spend – significant growth since 2016 and outperforming NZ average

Electronic card retail spending (as measured by Marketview) increased by 6.4% over the year, and well ahead of the New Zealand average of 4.5%. Actual spend for the December quarter was $546 million.

Health enrolments – a new measure to illustrate population growth

Infometrics has begun reporting enrolments with primary health organisations (PHO). This increased by 1.7% compared to the previous year (to December 2017). An average of 159, 361 people were enroled with PHOs at the end of the quarter compared to an average of 154,061 in 2013, an increase of 5,300.

PHO enrolments capture changes resulting from natural increase and migration flow. Infometrics has begun to use PHO enrolment as a proxy for population growth in the regions, as the recent removal of departure cards at airports has affected the timely availability of reliable net international migration data for the regions.

ENDS

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