NEW ZEALAND | A deteriorating economic climate continues to make life difficult for regional economies, according to Infometrics’ latest monitoring of regional economies.
The March 2024 Infometrics Quarterly Economic Monitor suggests that economic activity in the first three months of 2024 was 0.3 percent pa higher than at the same point in 2023, further slowing year-end growth down to just 0.2 percent pa – the slowest year-end growth since the original COVID-19 lockdown.
“The economy remains downbeat, with slower spending and investment continuing,” said Infometrics Chief Executive and Principal Economist Brad Olsen.
Current spending growth remains below inflation and population growth, as higher interest rates continue to bite. Marketview spending data shows that too-high inflation and higher interest rates are curbing spending, as households focus on the essentials.
“Consumer spending rose 2.8 percent pa on average over the year ending March 2024, slower than headline inflation at 4.0 percent pa, as households pay more but get less.
“The housing market remains stalled too, with higher listings and still-subdued sales as few buyers can access lending but more households under pressure test the waters on sales.
“House price growth remains weak given more competition in the market, with a larger pool of sellers trying to make a deal with a still-limited number of potential buyers," explained Olsen.
Future construction intentions continue to fall, with residential building consents issued over the March 2024 year down 25 percent pa from a year earlier.
“Consents are down across every region in New Zealand, with a nearly 60 percent fall in Tasman, and 30-35 percent pa falls in Wellington, Taranaki, and Northland,” said Olsen.
Construction has been a strong enabler of economic and employment growth in recent years, so these declines will be felt locally.
“Despite these challenges, exports look to have provided a slightly improved result at the start of 2024, with Lunar New Year delivering a bump in international tourism, and better dairy and horticulture returns are supportive too,” said Olsen.
“But meat prices are considerably lower, with mutton prices down 35 percent pa, lamb down 15 percent pa, and beef down 1.8 percent pa, lowering primary sector revenues. Forestry export prices are down 12-20 percent pa, with forestry removals down too. In slightly better news, on-farm costs have plateaued, providing some relief.”
Employment growth remains solid, with a 2.9 percent pa annual average increase in filled jobs recorded across the country.
“Job growth occurred across all regions, with the strongest gains in Marlborough, Auckland, and Otago over the March 2024 year,” said Olsen.
“But the labour market is weakening, with the unemployment rate rising and Jobseeker Support recipients up 7.8 percent pa on average over the last year, indicating more people are looking for work even as job ads show considerable declines.”
Read more from Brad Olsen here.
