South Island has strongest performers, with Southland and Otago in first and second place
Auckland drops to fifth spot, having led the scoreboard for two previous quarters
Economic challenges persist across the country, with a cooling labour market, falling migration and tourist numbers
Economic outlook subdued until 2025, according to the Scoreboard
The latest ASB Regional Economic Scoreboard for Q1 2024 is a mixed bag when it comes to the country’s growth, according to ASB Chief Economist Nick Tuffley.
Despite a modest increase in housing prices and a slight uptick in retail volumes, a cooling labour market and soft migration figures suggest the challenges of previous quarters remain throughout the country.
The Scoreboard ranks regions based on year-on-year growth across a range of measures, including employment, building consents and retail sales.
“While there were glimmers of hope in some of the numbers, such as soft gains in construction consents and CPI inflation easing to 4%, the unemployment rate sits at a three-year high of 4.3%. Tourism has underperformed for another quarter and annual net migration has fallen below 100,000 for the first time since May 2023. We don’t expect the fog to lift until 2025, so we’ve got a few more challenging months to get through yet,” says Mr Tuffley.
“The high interest environment continues to have a knock-on effect with regards to housing, construction and the labour market – not to mention New Zealanders leaving in record numbers. All of the regions will be asking the same question right now – when does the Reserve Bank plan to loosen monetary policy and drop our Official Cash Rate?”
South Island regions lead scoreboard with top two spots
Southland pushed Auckland from its number one spot for Q1 2024, up an impressive 10 places from 11th place last quarter. Mr Tuffley says the first-place finish is thanks in part to a booming construction and housing sector.
“Where other regions lower down the list such as Manawatū-Whanganui, Hawke’s Bay, West Coast, Waikato and Canterbury saw sizeable declines in construction, Southland recorded the fastest building consent growth in the country, increasing by more than 50% year-on year. House sales and house prices are both up year-on-year, by 32% and 4.4% respectively. We expect Southland’s sterling run to continue next quarter, with favourable farming conditions relative to other parts of the country helping revenues and confidence.”
Otago has stayed put in second place, enjoying a sixth consecutive quarter in the top three. Strong results across housing and employment growth, as well as the pull of international tourism, have ensured the region’s strong position.
Auckland knocked off top spot to fifth place, while Wellington tumbles to tenth
Auckland dropped from first to fifth place this quarter, despite the region enjoying the strongest increase in population and its highest consumer confidence scores in 11 quarters.
“Auckland’s performance this quarter was middling, with employment and house sales in line with national averages. We suspect further declines down the scoreboard could be possible with net migration having peaked and Aucklanders continuing to adjust their spending to meet higher mortgages.”
Wellington is down two places to 10th on the scoreboard. The capital is bearing the brunt of reduced government spending as the only region to witness a fall in employment, down 1.9% year-on-year. This is having an impact on other measures such as retail sales, which have fallen 2.2% year-on-year as well as new car sales which declined 12.4% year-on-year.
The full ASB Regional Economic Scoreboard, along with other recent ASB reports covering a range of commentary, can be accessed at our ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html
@ASBBank @ASBMarkets www.asb.co.nz
About the ASB Regional Economic Scoreboard
The NZ Regional Economic Scoreboard takes the latest quarterly regional statistics and ranks the economic performance of New Zealand’s 16 Regional Council areas. The fastest growing regions gain the highest ratings, and a good performance by the national economy raises the ratings of all regions. Ratings are updated every three months, and are based on 11 measures, including employment, construction, retail trade, and house prices.
