Economic snapshot shows buoyant Hawke’s Bay economy

Economic snapshot shows buoyant Hawke’s Bay economy
Outperforms national economy on some measures

Napier, 14 December 2018 – Solid provisional GDP, increased value of pip fruit exports, a buoyant primary sector supporting strong consumer spending, unprecedented tourism spend and falling unemployment. These are the stories of our Hawke’s Bay economy, according to Infometrics’ Quarterly Economic Monitor – Hawke’s Bay Region, September 2018.

Our region is doing well, says Carolyn Neville, CEO of Business Hawke’s Bay.

“In fact it’s doing really well. Strong pip fruit performance and good pricing for meat and the wine industry and the flow on effects from these sectors have contributed to a really good regional economic performance.

“There is an undeniable feeling that Hawke’s Bay is doing well, and on some measures better than New Zealand as a whole, and this data supports that.”

Key regional highlights include*:
• Provisional GDP growth estimate 3.1% compared to 2.9% nationally
• Electronic card spending on retail purchases up 6.4% compared to 4.8% nationally
• Car registrations up 3%, compared to 1.7% decline nationally
• Tourism spend was $645m, up 5.3% on the prior year
• Regional unemployment fell to 4.2%, compared to 4.3% nationally.

*all 12 months to September 2018 unless otherwise stated

As Hawke’s Bay gears up for another bumper tourist season with record cruise ship visits, and a bountiful harvest leading to expected strong primary sector performance, the past year has been one of growth and confidence across a range of key measures.

GDP
Provisional regional GDP for the 12 months to September 2018 was up 3.1% on the prior year and higher than the national average of 2.9%. Annual GDP growth in Hawke’s Bay peaked at 4.1% in 2016.

Net inward migration slowing, but streets ahead of 10-year average
435 people migrated to Hawke’s Bay on a permanent or long term basis this year*.

“Nationally and regionally migration is slowing, with Hawke’s Bay migrant numbers halving in the past year,” says Carolyn Neville.
“Hawke’s Bay is an attractive place to live with a lifestyle that’s hard to beat. Transport connections have never been better with more than 25 return daily flights to major centres. Our recent migration numbers tell a markedly different story compared to the 10-year average, which shows nearly 100 people a year leaving the region.”

Unemployment rate – big improvements and outperforming the national average
Hawke’s Bay’s annual unemployment rate has fallen from 6.9% to 4.2% in the past year, and is at a 10 year low, says Carolyn Neville.

“Strong economic performance has led to job growth, and with that a reduction in the unemployment rate. Initiatives under Matariki, Hawke’s Bay’s regional economic development and social inclusion strategies and action plan (HBREDS) are focused on job creation and getting more people into work.

“Project 1000, an HBREDS initiative to support the creation of 1000 new jobs for Hawke’s Bay job-seekers across all industry sectors with an emphasis on the booming horticulture sector, has created 700 jobs to date. The number of working Jobseeker Support recipients decreased by 1%, compared to a national increase of 2.2%

“While there are more jobs, which is fantastic for Hawke’s Bay, we know that there are some challenges and some lumpiness between job seekers and opportunities. As a region we need to do more to get people work ready and match skill sets to vacancies. This requires the co-operation of business, iwi, community organisations, local and central authorities and education providers.”

Residential and non-residential building consents, a tale of two halves
One hundred and sixty new residential building consents were issued in the September 18 quarter, down from 172 for the same quarter last year. On a 12-month basis, the number of consents were up 2.4%, compared to a 5.4% increase nationally.

Non-residential consents tell a story of more vigorous growth, with the value of consents up 12.2% to $138 million for the year to 30 September 2018 compared to 4.9% growth nationally.

Real estate: Number of sales increases, HB regional price growth outperforms New Zealand average, while average prices lag behind
The regional real estate market experienced strong price and volume growth. House prices increased by 9.7% for the 12-months to September, and the average sale price was $448,376. Nationally house prices increased by 8.4% and the average sale price was $660,860.

The number of houses changing hands increased by 2.2% for the year to reach 2,785, well above the regional 10-year average.

While Hawke’s Bay’s real estate market is relatively inexpensive compared to other regions, rising prices were a mixed bag, says Carolyn Neville.

“We need to make sure that working families are able to buy or rent a house. Household income in Hawke’s Bay lags behind other regions, and we wouldn’t like to see affordability worsen.

“That would put pressure on worker availability which would then affect things like productivity. It’s a delicate balance and we need to make sure that we can attract skilled workers and they can afford to live here.”

Infometrics is predicting that house price inflation in regional areas will cool throughout next year as strong residential construction activity increases the supply of new houses and buyer demand softens in response to slowing population growth and tighter government regulations on foreign buyers.

Vehicle registrations
Car registrations increased 3% over the year, compared to a national decline of 1.7%. Commercial vehicle registrations eased by -0.5% but have been bubbling along at historic highs for some time.

Guest nights
Tourists spent an unprecedented $645 million in Hawke’s Bay, up from $612 million a year ago. Commercial guest nights fell by 0.3%, slightly down from their peak in 2017.

Infometrics speculates that the rising prevalence of private accommodation platforms such as Airbnb may have contributed to the contraction in commercial guest nights. According to a Radio New Zealand article, around 600 homes in the region are advertised on Airbnb.

Cruise ship tourism is setting new records, with a 26% increase in the number of ships calling at Napier Port. More than 125,000 passengers and 50,000 crew are set to visit Napier this season, which is worth an estimated $20 million to the region.

Retail spend – keeps climbing and outperforms NZ average
Electronic card retail spending (as measured by Marketview) increased by 6.4% over the year, and well ahead of the New Zealand average. Actual spend for the September quarter was $447 million.

The full Infometrics Quarterly Economic Monitor Hawke’s Bay Region September 2018, is available on request from Business Hawke’s Bay

ENDS

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