Manawatū District Quarterly Economic Update - December 2020 1 April 2021
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Manawatū District Quarterly Economic Update – December 2020 1 April 2021
Key messages • The strong economic performance of the District continues and the outlook for the local economy in 2021 is strong; • Earnings growth, strong GDP performance, and continued growth in consumer spending highlights the resilience of the local and regional economy; • Unprecedented levels of investment and relatively strong trade conditions are expected to sustain local economic performance. Global economic volatility, however, will remain elevated in 2021; • Labour force indicators remain positive but the number of potential workers requiring jobseeker assistance remains significantly higher than pre‐COVID levels;
Key messages • House prices continue to rise strongly however there may be some positive signs of easing? Slowing house price growth would support affordability objectives in the District; • Non‐residential construction activity dominates growth in construction investment; • Double‐digit growth in average weekly rental prices continue; • Monetary and fiscal policy remains relatively supportive of heightened economic activity however there are factors to watch. Incoming policy may impact on the supply and price of rental properties to the market. We will be watching the local data closely; • Supply side bottlenecks, inflationary pressures and rising interest rates are expected to be a feature of the global economy over 2021. Despite substantial intervention by the RBNZ, it is likely rising interest rates will flow through to the NZ economy over the next year or two.
Minor contraction in GDP to the YE Dec 2020
Worst affected Annual GDP
change
Queenstown‐ ↓ 8.4%
Lakes District
Mackenzie District ↓ 6.9%
Auckland ↓ 4.3%
Waitomo District ↓3.9%
Westland District ↓ 3.6%
Rotorua District ↓ 3.4%
Grey District ↓ 3.4%
Wellington City ↓ 3.2%
Christchurch City ↓ 3.2%
Regional quarterly GDP results continue to show strength
2020 quarter vs
same quarter
Quarterly GDP change the previous
% year
Ruapehu District +7.8% +4.0%
Whanganui District +0.7% +3.2%
Rangitikei District +16.8% ‐1.5%
Manawatū District +10.9% +2.0%
Palmerston North
City +2.2% +0.6%
Tararua District +13.4% +1.1%
Horowhenua District +10.0% +1.2%
Manawatū‐
Whanganui Region +5.6% +1.4%
New Zealand +5.3% +0.2%
Queenstown‐Lakes
District +0.6% ‐8.9%
Auckland ‐5.9% ‐0.9%
Local jobs and earnings rise in the Dec 2020 qtr vs Dec 2019
• Council Annual Annual jobs
earnings growth %
growth %
Horowhenua ↑6.0% ↑4.4%
Manawatū ↑6.5% ↑7.4%
Rangitikei ↑5.3% ↓2.6%
Tararua ↑4.7% ↑4.8%
Horizons ↑4.7% ↑1.4%
Region
Whanganui ↑4.1% ↑2.4%
Palmerston ↑4.1% ↓0.9%
North
Ruapehu ↑2.1% ↑5.0%
New Zealand ↓1.2% ↓0.9%
The value of New Zealand exports continue to exceed import values
Import values fall while export values soften relative to 2019 (YE Feb)
$5b of investment will continue to support the regional economy
Regional labour force indicators remain positive
• The District unemployment rate remains beneath the
Manawatū‐Whanganui Region
and NZ unemployment rate (2.8% vs 4.6%)
Change in the Labour Force – Dec 2020 vs Mar 2020
• The number of people of working age increased by
900 between March and December while 1,900 more
Working age population = 202,000 (↑ 900)
people were either working or available for work
• The underutilisation rate declined from 15.0% in the Workforce = 140,600 LFPR = Not in
Workforce =
June quarter to 12.8% in the December quarter (↑1,900) 69.6%
61,300 (↓
(↑0.6%) 1,100)
• There was 1,200 more people employed in the region
in the December quarter vs the March quarter 2020
Employment Unemployment
• There were 4,000 more people employed in the rate = 66.5% rate = 4.5% (↑
0.5%)
(↓ 0.3%)
December 2020 quarter vs December 2019
Labour force changes are an important indicator and will
Underutilisation
continue to be monitored in detail. rate = 12.8% (↑
2.2%)Jobseeker numbers fall but remain elevated • Total jobseekers and recipients of COVID Income Relief Payment ↓ 38 (from Dec) to 924 in February 2021; • CIRP recipients declined to zero from 14 in Dec, while Workready jobseekers ↓30, Jobseekers (health condi on) ↑6; • To YE Feb, income payments increased by 193. This is ↑26.4% on Feb 2020 compared with ↑ 42.7% across NZ; • Monthly regional job ads ↑8.3% to YE Dec 2020 vs NZ ↓7.9%.
‘Moderate’ YoY house price growth in early 2021
Mortgage debt rises while total consumer loans fall in 2020
Non‐residential consents drive increase in construction investment $ (+25.1%)
Rental prices continue to surge while public housing demand grows
Retail spending ↑ 3.5% vs a ↓ 5.0% in na onal spending ( YE Jan 2021)
Manawatū Region CEDA – Marketview January Quarter Report
Sanson leads spending growth across the region
Cardholder spending ↑ across domes c markets
Regional
consumers are
loyal compared
with the
national
averageTECT indicates moderate impact on domestic visitor spending Area Jan 2020 Jan 2021 % change Manawatū District $28.1m $27.3m ↓3.0% Palmerston North City $215.9m $199.1m ↓7.8% Whanganui District $73.1m $75.4m ↑3.2% Auckland $2,862.7m $1,957.6m ↓3.2% Wellington City $784.6m $570.4m ↓2.7% Queenstown‐Lakes $1,169.9m $810.4m ↓30.7% District Correction – QTLD tourist expenditure fell by almost 31.0% (not 3.1%)
Things to watch
• Elevated global economic risk
• Continued global surges of COVID‐19 and restrictions on economic activity remain a
area of risk for the NZ economy in 2021
• Export conditions for commodities produced in the district will be watched closely
• Higher inflation and interest rate expectations (+ supply side constraints)
• Construction sector supply chain disruption
• The flow through of global inflationary pressures and rising longer term interest
rates
• Government policy
• Deteriorating housing and rental affordabilityIn summary • Our industry structure, high levels of inward investment and limited exposure to international tourism continue to drive our strong economic performance relative to much of New Zealand. • There are some things we can do to support outcomes for our businesses and communities and things we can watch to ensure we are prepared to respond to any changing circumstances.
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