Cantometer Index holds steady at high levels

Friday, 28 November 2014, 11:10 am
Press Release: ASB Bank

EMBARGOED until 0500 Friday November 28, 2014

Media release

ASB Cantometer Index

EMBARGOED until 0500 Friday November 28, 2014

Cantometer Index holds steady at high levels

• ASB Cantometer Index holds steady; just shy of record high

• Construction demand eases, but from very strong levels of activity

• Rebuild boosting demand for workers across the sectors

The Cantometer index held steady at 1.8 in November, just below its record high of 1.9 reached in September.

ASB Chief Economist Nick Tuffley says construction demand eased slightly, with signs of a reduction in construction work in the pipeline.

“That said, construction activity is coming off very high levels. We are seeing strong growth in concrete sales as the foundations are set for new housing and commercial buildings,” Mr Tuffley says.

Canterbury labour market indicators have been mixed. Although wage growth in the region was slower than the national average in recent months, the earthquake rebuild is boosting demand for workers across the sectors, from construction to professional services.

“The stronger labour market is encouraging a lot of workers to move to the region, with net migration into Canterbury rising strongly over the past year. Population growth is supporting higher household spending on items such as cars.”

Outlook

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Despite signs of flatter construction activity in the near term, the economic outlook remains positive in Canterbury, says Mr Tuffley.

“We still expect construction activity to remain a key support of Canterbury economic activity over the coming years. Population growth will underpin stronger house-building demand, while demand for commercial building construction will also pick up.”

About the Cantometer
The Cantometer is designed to summarise economic activity in Canterbury. The study takes a range of publicly 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 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.

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ENDS

ASB_Cantometer_Index_November_2014.pdf

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