Quarterly Economic Monitor from Infometrics reflects overall positive increase in GDP but some sectors continue to struggle
Posted on Wednesday 18 May 2022
The Infometrics Quarterly Economic Monitor (QEM) was released on Tuesday 17 May for the March 2022 quarter. It presents good news on overall GDP but underlying mixed results due to downward pressures from Omicron impacts. We can also see uplifts from population growth and construction have given mixed results for Nelson Tasman. The region may be doing well in general, but hospitality and some retail continues to struggle.
We have summarised some highlights from the report below. For the full QEM report, please see our Insights Page.
- The 5.2% Provisional GDP growth in Nelson Tasman for the year to March 2022 has put the region’s overall performance above pre-Covid levels. The December year saw a virtually even performance with Tasman at 5.6% and Nelson at 5.5%, equalling Total NZ also at 5.5%. Now however the year to March shows Tasman at 6.3% and Nelson at 4.3%, compared to NZ at 5.2%
- The higher performance of Tasman is due to the ongoing high level of construction work in Richmond (with heavily increasing prices for materials) and Work From Home Tasman residents staying closer to home, whilst Nelson has suffered from a lack of foot traffic, both visitors and commuting locals, impacting hospitality and retail. (A pattern seen elsewhere in the country).
- This is reinforced by the difference in consumer spending, with Tasman up 7.1% whilst Nelson only saw 3.6% growth – these figures have to be offset by the record 6.9% inflation seen in the year to March, along with very high fuel costs. In the December year Tasman also outstripped Nelson with spend increasing by 7% compared to 5%, but since then we have had the Omicron effect inhibiting visitation to Nelson City as noted above. Ongoing high inflation and the lowest consumer confidence levels on record suggest that further increases in consumer spend will be muted.
- Interest rate rises are expected to provide some easing of inflationary pressures but ongoing staff shortages across the board, increasing costs and ongoing supply chain issues mean that real growth will be difficult for some time to come.
- Visitor expenditure is another case in point – in Tasman this increased by 6.9% in the year to March, while for Nelson it was just 1.4%. By comparison, the December year showed the summer/Christmas effect with Tasman spend up 13.4% and Nelson up 7.2%. We must remember that these increases are in comparison to the highly Covid-impacted preceding year, and these figures indicate that Tasman is bouncing back much faster than Nelson.
- Traffic flows in Nelson were down 0.8% for the year whilst in Tasman they were up 1.3%, closer to the national figure of 1.8%. This is mostly due to the high incidence of Working From Home in Nelson’s office-based employment, and the ongoing increased levels of traffic ensuing from the high levels of building activity in Richmond – trades coming and going, and population increases as borne out by the much higher level of health enrolments in Tasman (up 3.1%) compared to Nelson (up 0.7%). This continues the trend from the December year where health enrolments were up 2.9% in Tasman and 0.6% in Nelson, compared to NZ at 0.9%
- Employment is still increasing, growing 1.8% for the combined region but most commentators agree that the country is just about at its limit given how low unemployment is (3.5% Nelson Tasman vs 3.2% nationally) – and our relatively low number of Jobseekers, whilst still well above pre-Covid levels, has fallen substantially, down 10% in the year to March – making the fifth quarter in a row. Net negative migration in the country (down 7,300 people for total NZ) is another factor in the ongoing tight labour market. The December year saw a 1.2% increase in employment for Nelson Tasman versus 1.7% in NZ, and our Jobseeker numbers then fell 3.6% in direct contrast to total NZ which increased by 1.9%.
- Residential building consents granted were 240 for the year, up again from the 171 the previous year and notably above the 10-year average of 164. However, the Tasman boom has paused, with consents there actually down 8.7%. The Nelson percentage increase sounds huge at 39.6% but this is on very low base numbers – 82 consents granted in year to March 2022 versus 46 in the previous year and it is likely that this is mostly due to a single large development. Housing completions however continue to be impacted by materials shortages.
- House prices have seen a downward trend reported recently and the year to March has seen a welcome softening of the scary 22.8% increase seen in the region in the year to December. Nevertheless, prices in Nelson Tasman were still up 16.8% in the year to March (vs 17.7% total NZ) giving an average house price of $867,663. Good news for buyers is that prices are expected to moderate throughout 2022.
- House sales are declining all over the country (except Marlborough) and for Nelson Tasman sales were down 14.2% in the year, accelerating the trend from the December year down 12.8% and ahead of the curve for Total NZ where sales were up 3.5% in the December year then down 9.3% in the March year. Again this was very uneven between our two regions: Nelson house sales fell by a huge 20.3% year to March, indicating that the supply of properties has dried up, whilst in Tasman the drop was only 6.5%. House sales are expected to decline nationally as prices and interest rates defeat prospective buyers.
- The number of commercial vehicle registrations increased by 28.4% in the year to March, with 1242 new registrations, compared to a 10-year average of 947. This follows the national trend and is likely due to a combination of deferred decisions during the worst of the Covid-19 uncertainty, and buyers wanting to buy before the new higher fees apply to higher-emissions vehicles.