Infometrics reveals which regions got through summer in best shape
Monday, 17 May 2021
Summer gave an economic boost to some regions this year, but main centres are still feeling the pain of more people working from home, Infometrics says.
The economics consultancy has released its latest Quarterly Economic Monitor.
It shows Bay of Plenty as the top-performing regional economy in the March 2021 quarter, growing at a rate of 3 per cent per annum as the national economy slipped back 0.3 per cent.
“Domestic travel, strong construction activity, and a more robust labour market have helped support regional economies in recent months, as businesses press ahead with work and look to hire more workers, which in turn is assisting Kiwi households to keep spending,” Infometrics senior economist Brad Olsen said.
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“However, supply chain disruptions and the lingering effects of Covid-19 are weighing on our economic recovery.”
Olsen said the main metropolitan centres were under more pressure, particularly as there seemed to be a permanent shift to more people working form home. Public transport use was down in the main centres, he said, and there had been a reduction in spending.
Some regions had felt the absence of international tourists most acutely over summer, he said, but others had benefited from the strong construction market and good primary sector activity.
“Higher commodity prices have supported economic activity in Bay of Plenty, with good returns for dairy, meats, horticulture, and wood exports,” Olsen said.
“Taranaki and Waikato regions were also strong performers in the March 2021 quarter, with solid domestic tourism spending, a higher dairy payout, and sustained higher building levels keeping economic activity rising. Firm primary sector activity has bolstered business investment, and New Zealand’s still strong trading position is supporting many provincial economies.”
He said summer was always going to be tough for the areas that relied heavily on international tourists. For some, the summer months would be harder than the preceding quarters, he said.
“Tourism spending losses expanded over the three months to March 2021, with a 10 per cent drop compared to the start of 2020,” Olsen said.
“The West Coast, Otago, Auckland, Canterbury, and Southland all saw large falls in spending, with domestic travel simply not enough to fill in the spending hole.”
The drop in unemployment in the March 2021 quarter, and slowly falling Jobseeker Support numbers, reinforced improvements in the labour market. “Filled jobs across New Zealand are showing strong employment trends in healthcare, construction, and public administration industries. Other industries, concentrated around tourism activities, are slowly looking to turn a corner,” Olsen said.
He said the new trans-Tasman bubble was unlikely to be the panacea some had hoped for, but it would provide a much-needed boost to our hardest hit tourism regions, particularly those preparing for a winter ski season.
He said arrivals from Australia were 30 per cent of their pre-pandemic level while departures were 25 per cent.
“New Zealand’s economic recovery lost some momentum at the start of 2021, and the economy could remain sluggish throughout the rest of the year as the lingering effects of Covid-19 limit New Zealand’s economic potential, with some areas set to remain harder hit for longer. However, New Zealand’s economic outlook is expected to turn brighter as vaccines start rolling out and New Zealand charts a path towards reopening to the world eventually.”
Olsen said while the bubble had not delivered the impact the tourism sector had hoped for, any extra spending was welcome.
Coupled with continued supply chain disruptions, growth is set to be patchy, but the path forward for the economy was till more upbeat.