Forget Auckland, Wellington or Christchurch – Gisborne is where the most economic growth was happening in the June quarter, according to new data.
ASB has released its latest Regional Economic Scoreboard, which ranks regions based on their annual growth in employment, building consents and retail sales.
The three months to June were relatively bleak across the board, ASB said, but senior economist Chris Tennent-Brown said easing inflation pressure by the end of the year should mean a brighter 2025.
He said he expected unemployment to hit 5% by the end of the year and the construction outlook was likely to remain weak.
“However, we’re seeing some positive signs in the housing market with house sales increasing by 6.8% and prices rising by 2.2% this past quarter, and we can expect it to pick up with a bit more speed in 2025.”
Gisborne took the top spot for the first time in four years.
Its construction consents were up 40.8% on an annual basis and house sales growth was the second-highest in the country, up 25.8%. ASB chief economist Nick Tuffley said that was because of the rebuild activity after last year’s cyclone.
“We did see Hawke’s Bay do a similar thing at times last year, in terms of starting to see housing market recovery, building activity recovery, spending recovery coming through. That seems to be the story with Gisborne, just slightly different timing.”
Auckland was down four to ninth equal and Wellington also down four, to 14th equal.
Wellington’s problems were self-evident, Tuffley said, with the impact of public sector cutbacks being felt.
“Consumer confidence, which we measure, has dropped very, very sharply, reflecting the sentiment that’s in there.”
In Auckland, households often had larger mortgages, which meant they were more squeezed by higher interest rates, he said.
“The housing market is on the below average side as well … Areas that are feeling the pinch more so than others from things like high interest rates, such as Auckland, should start to see some relief over time.
“The impact of falling mortgage rates on the mortgage belt will take time to work through given people are still on fixed-rate mortgages even though the fixed periods have been relatively short of late.”
Tuffley and Tennent-Brown said dairy-related regions of the country should have increasing confidence because their income was improving.
Meat prices, particularly for lamb, had lifted.
“Exports for Q2 were $26.26 billion, up from $25.99b a year ago, with dairy still our most attractive offering,” Tennent-Brown said.
“Our 2024 growth forecasts for some of our key trading partners have been revised higher which is good news for the country.
“Much like the rest of the economy however, growth is expected to remain below average for 2024, with weakness in China a concern.”
Nelson was bottom of the table, which Tuffley said was due to a mix of factors.
“Forestry, fishing have been a bit more challenging, the tourism market plateauing is perhaps not helping the region.”
Tuffley said provincial areas tended to be doing better overall, in the context of a “pretty tough” economy overall.
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