Weaker economic activity and falling employment have hit regional economies, with the economic crunch deepening across the country, according to Infometrics’ latest monitoring of regional economies.
Provisional estimates in the June 2024 Infometrics Quarterly Economic Monitor suggested that economic activity in the June 2024 quarter was 0.2 percent lower than a year ago, turning year-end growth negative at -0.2 percent.
“The economy is weaker, with households tightening their belts as unemployment rises and job security deteriorates. Businesses are reporting lower sales and limiting further hiring,” said Infometrics Chief Executive and Principal Economist Brad Olsen.
“Economic sentiment remains poor, with the private sector struggling, even as population-driven growth in sectors such as health and education keeps headline numbers looking less downbeat than many are feeling.”
Employment falls across several private sector industries, driving job declines across regions. The largest decline was seen in Tairāwhiti Gisborne, with a 1.2 percent fall in filled jobs in the June 2024 quarter. This was followed by a 0.6 percent decline in Taranaki and a 0.4 percent drop in the Nelson and Wellington regions.
Employment growth was more robust in parts of the South Island, with job growth above one per cent in both Canterbury and Otago, despite current economic headwinds.
Retail trade, manufacturing, the primary sector, construction, and professional services have faced more challenging environments.
National spending growth slowed in the June 2024 quarter, with Marketview card spending data showing just a 0.3 per cent rise.
“Although it’s encouraging to see inflation slowing down to 3.3 per cent in the June quarter, this inflation rate still far outstrips growth in card spending, meaning households are buying less overall. This trend and continued population growth further highlight the downturn in per-person spending, as Kiwis keep a tighter hold of their wallets.”
Primary sector activity has been mixed, with on-farm costs stabilising at high levels and some commodity prices beginning to recover. Dairy prices have improved, with the current pay-out estimated to deliver $15.1b to regional economies, up $373m from last season.
Meat prices have recovered in recent months, with beef prices at the end of June sitting 2.1 percent higher than in June 2023. Sheep meat prices remain lower than a year ago, by 16-33 per cent, but have also shown some improvement in recent months.
Horticulture exports have been performing strongly, too, but forestry product export values were down 5.8 percent nationally in the June quarter, and recent prices have remained near 10-year lows.
“It’s tough out there, with fewer vacancies and unemployment set to rise over coming months, but the economic hit isn’t nearly over yet. But lower interest rates throughout the next year, as signalled by the Reserve Bank now that inflation is under control, will reignite economic sentiment to a degree, laying the foundation for greener shoots to emerge in the economy by mid-2025.”
Infometrics published new regional groupings, providing a publicly accessible view of how different areas perform economically. Alongside the publicly available Quarterly Economic Monitor for New Zealand, Infometrics has just released Monitors for Metro, Provincial, and Rural regional groupings.
“We know that different parts of the economy face different economic trends. Our regional groupings go some way to providing richer insight as to how these differences appear. These groupings make it easier to compare a city or district to a similar collection of areas and are available in both Infometrics’ QEM and Regional Economic Profile.”
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