Christchurch economy adjusting as growth eases

Wednesday, 8 June 2016

Christchurch's economy is heading for a period of low growth, but high activity, as the $40 billion rebuild plateaus. 

That was the the key message in the Canterbury Development Corporation's (CDC) latest economic update.

CDC chief executive Tom Hooper said that while economic activity levels remained high, growth rates would continue to ease, unemployment levels would rise slightly from their historic lows, and the housing market would plateau.

'The economy has grown quickly to the level it requires to complete the rebuild, so growth will slow.'

CDC forecast gross domestic product growth to ease to less than one percent in the current year.

'The rebuild is approximately 10 per cent on top of the underlying economy, so Christchurch will remain a busy place to live and work for several years.'

Unemployment in the city and region was three per cent, against a national average of almost six per cent, and was expected to remain below the New Zealand level for at least a year. 

In the March quarter 22 per cent of South Island firms reported difficulty in finding skilled labour, a considerable improvement over the past year, Hooper said.

'That tells us that we have seen some of the pressure come off a very high level of demand that's been met by immigration, and by people moving around nationally.'  

The report said that on average Canterbury workers now earned just over $944 per week, including overtime. Although they had historically earned less than the New Zealand average, that difference had narrowed to $32 a week.

The workforce participation rate (the number of people over the age of 16 and in the workforce) of 72 per cent continued to exceed the national average of 69.5 percent.

'There's a significant portion of the population that would not normally be in the work force that are there now,' said Hooper.

Some volatility was expected in the labour market as rebuild activity wound down and some skills were not transferable.

Outside the rebuild the tourism, manufacturing and high tech sectors had continued to perform well.

However Hooper said the rural economy was softening with a relatively sustained and severe down turn, but the rebuild had helped cushion the impact on the city. 

'Normally in Christchurch we'd be in economic shock based on what's happening in the rural region.'