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Construction activity continues to grow
Construction activity continues to grow
• Construction activity continues to drive
Cantometer index higher.
• Lift in car
registrations reflects increased population growth and
economic activity across Canterbury
region.
• Canterbury house sales lift as buyer
reservations toward TC3 land fade.
The
Cantometer Index continues to move higher, lifting to 0.8 in
June from 0.7 previously.
ASB Chief Economist Nick Tuffley says, “Since we started publishing the Cantometer in October, the index has steadily lifted from 0.1 in the first issue to 0.8 in June. This increase comes as construction activity continues to lift, with the rebuild also boosting other economic activity in the region with it.”
Once again, the lift in the Cantometer was led by construction. Mr Tuffley says, “The construction index increased to 2.7 from 2.4 in the previous edition. The March quarter building activity showed a 19% increase in construction work in Canterbury over the quarter.”
Car registrations have also increased strongly over recent months. Mr Tuffley says, “The increase in car registrations is a strong indication of increased population and economic activity in the region. This follows strong increases in net international migration inflows over the past few months, confirming population growth is picking up as the rebuild requires additional labour.”
The housing market is also showing improvements, with house sales continuing to lift as some confidence returns to the Canterbury market. Anecdotes from real estate agents suggest some of the earlier buyer reservations toward TC3 land are fading. Mr Tuffley notes indicators suggest Canterbury house prices will continue lift sharply over 2013 as demand continues to outstrip supply.
Outlook
“Over the coming year, the RBNZ will
balance the construction-led lift in activity and
intensifying housing market pressures against the impact of
the still-elevated NZD. We continue to expect the RBNZ will
leave the OCR unchanged until March 2014,” concludes Mr
Tuffley.
About the
Cantometer
The Cantometer is designed to
summarise activity in Canterbury. The study takes a range of
publically available regional economic data, which are
standardised and aggregated into a summary measure. The
index has been rebased to zero in June 2010 (the end of the
quarter immediately preceding the first earthquake) such
that a positive number represents activity being above
pre-earthquake levels.
Along with the aggregate
Cantometer index, there are five sub categories:
Construction, Housing, Employment, Consumer spending and
Miscellaneous*.
These sub-indices will provide some
insight into which sectors are driving the rebuild activity
at a given point in time.
For most activity the
data reference the level of activity. However, when
incorporating wages and house prices into the index we
believe levels are less informative. Instead the index uses
prices relative to the rest of the country.
An increase
in relative prices is a signal for resources to be
reallocated to the Canterbury region.
The historical Cantometer series represented on the charts is a simple average of the complete set of data for each month.
*The miscellaneous category includes electricity,
car registrations, guest nights and permanent and long-term
net migration. A common factor driving these areas will be
population growth, and we expect all these indicators to
increase as the rebuild gathers momentum.
ENDS
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