Auckland still tops the scoreboard
The ASB Regional Economic Scoreboard for Q4 2023 has highlighted a tough economic landscape nationwide, with significant downturns in construction and house prices.
The scoreboard evaluates regions by their annual growth in various metrics like employment, retail sales, and building consents.
Chris Tennent-Brown (pictured above), ASB senior economist, noted that high inflation and interest rates are affecting households and businesses, with regions topping this quarter's Scoreboard being those that manage better, not necessarily those performing strongly.
Signs of economic recovery
Despite the gloom, Tennent-Brown sees potential for recovery.
“New Zealand has hopefully weathered the worst of the overall global economic downturn and now we’re looking ahead to the next growth phase,” he said in a media release.
“While it may take some time for momentum to return, we’re optimistic about the coming few years once we’ve got the inflation genie back in the bottle. Lower interest rates are the usual precursor for growth phases but when this will happen is the big question for all regions over 2024.”
Auckland: A resilient leader
Auckland remains at the forefront of the ASB scoreboard due to its robust population and employment growth, alongside a surge in house and new car sales.
Looking ahead, Tennent-Brown anticipates a variety of factors impacting Auckland, including tourism spending which may not fully counterbalance the challenges of debt servicing and living costs. He also highlighted uncertainty regarding the city’s migration boom, noting Auckland’s significant share of incoming migration.
Wellington’s scoreboard surge
Wellington saw a notable rise in the ASB scoreboard, moving up six places to eighth. Despite improvements, Tennent-Brown warned of potential challenges ahead, particularly with government spending cuts and infrastructure needs.
“The total construction pipeline... has sprung a leak,” he said, pointing to a significant drop in construction consent issuance.
Construction sector’s persistent hurdles
The construction sector's capacity constraints and a sharp decline in consent values underscored ongoing challenges.
This quarter, construction consent values saw the scoreboard's largest drop, falling 17.3% annually across most regions except the West Coast, Gisborne, and Hawke's Bay, the last two likely buoyed by Cyclone Gabrielle rebuilding efforts. Most other regions experienced significant declines, with Waikato and Tasman facing drops over 35% year-on-year.
Tennent-Brown reflected on the sector's situation, suggesting a shift towards more sustainable levels of activity despite a dip in consents.
The complete ASB Regional Economic Scoreboard and additional ASB reports are available on the ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html.
See LinkedIn post here.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
