Slow growth challenges regions
The latest Infometrics Quarterly Economic Monitor indicated a continuing decline in regional economies, with economic activity in the first quarter of 2024 only 0.3% higher than the same period in 2023.
This slight increase marks a slowdown to a mere 0.2% annual growth by year-end, the slowest since the initial COVID-19 lockdown.
“The economy remains downbeat, with slower spending and investment continuing,” said Brad Olsen (pictured above), Infometrics CEO and principal economist. “Current spending growth remains below inflation and population growth, as higher interest rates continue to bite.”
Marketview spending data further revealed that high inflation and interest rates are restricting consumer spending, which grew by 2.8% annually, lagging behind the headline inflation rate of 4.0%.
Housing market stagnation
“The housing market remains stalled, with higher listings and still-subdued sales as few buyers can access lending but more households under pressure test the waters on sales,” Olsen said.
This has resulted in weak house price growth amid increased market competition and a limited pool of buyers.
Decline in construction and building consents
Future construction intentions are also in decline, with residential building consents down 25% annually as of March.
“Consents are down across every region in New Zealand, with a nearly 60% fall in Tasman, and 30-35% falls in Wellington, Taranaki, and Northland,” Olsen said.
The reduction in construction activity, previously a key driver of economic and employment growth, is expected to impact local economies significantly.
Mixed results in export sector
Despite domestic challenges, the export sector saw a slight improvement at the start of 2024, aided by increased international tourism during the Lunar New Year and better returns from dairy and horticulture.
However, meat prices have dropped significantly, affecting primary sector revenues, while forestry export prices also declined.
On a positive note, on-farm costs have plateaued, offering some relief.
Labour market conditions
Employment growth remains robust with a 2.9% annual increase in filled jobs.
“Jobs growth occurred across all regions, with the strongest gains in Marlborough, Auckland, and Otago over the March 2024 year,” Olsen said.
Yet, the labour market shows signs of weakening, with rising unemployment rates and a 7.8% increase in Jobseeker Support recipients, indicating a growing number of people seeking work amidst a downturn in job advertisements, Infometrics reported.
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