Weaker economic activity and falling employment are hitting 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, suggests that economic activity in the June 2024 quarter was 0.2%pa lower than a year ago, turning year-end growth negative, at -0.2%pa, too.

“The economy is clearly weaker, with households tightening their belts as unemployment rises and job security deteriorates. Businesses are reporting lower sales and limiting further hiring,” says 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 have driven job declines across seven of 16 regions,” says Mr Olsen. “The largest decline was seen in Tairāwhiti Gisborne, with a 1.2%pa fall in filled jobs in the June 2024 quarter, followed by a 0.6%pa decline in Taranaki, and a 0.4%pa drop in both the Nelson and Wellington regions. Employment growth was stronger in parts of the South Island, with jobs growth of above 1%pa in both Canterbury and Otago, despite current economic headwinds.”

Retail trade, manufacturing, and the primary sector are all facing more challenging environments, as are the likes of construction and professional services.

National spending growth slowed markedly in the June 2024 quarter, with Marketview card spending data showing just a 0.3%pa rise. “Although it’s encouraging to see inflation having slowed to 3.3%pa in the June quarter, this inflation rate still far outstrips growth in card spending, meaning households are buying less overall. This trend, coupled with continued population growth, further highlights the downturn in per-person spending, as Kiwis keep a tighter hold of their wallets,” says Mr Olsen.

Primary sector activity is mixed, with on-farm costs stabilising at high levels, and some commodity prices beginning to recover. Dairy prices have improved, with the current season pay-out estimated to deliver $15.1b to regional economies, up $373m from last season. Meat prices have shown some recovery in recent months, with beef prices at the end of June sitting 2.1% higher than in June 2023. Sheep meat prices remain lower than a year ago, by 16-33%pa, but have also shown some improvement in recent months. Horticulture exports are performing strongly too, but forestry product export values are down 5.8%pa nationally in the June quarter, and recent prices have remained near 10-year lows.

“It’s tough out there, with fewer vacancies, and with unemployment set to rise over coming months, the economic hit isn’t nearly over yet,” says Mr Olsen. “But lower interest rates throughout the next year, as signalled by the Reserve Bank now that inflation is getting under control, will start to reignite economic sentiment to a degree, laying the foundation for greener shoots to emerge in the economy by mid-2025.”

New regional groupings, published today by Infometrics, provide a publicly accessible view of how different types of areas are performing 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 are facing different economic trends,” says Mr Olsen. “Our regional groupings go some way to providing richer insight as to how these differences appear.”

“Demonstrating the insights these regional groupings allow, employment growth on average over the 12 months to June 2024 has been strongest in metro areas, up 2.4%pa. Provincial areas have seen jobs growth of a slower but still solid 1.8%pa, while rural areas have seen much slower growth of just 0.7%pa.”

“These three 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.”

ENDS

Note:

The Infometrics Quarterly Economic Monitor is a series of reports about local economies, rather than one comprehensive report. This media release provides a high-level overview of trends and changes to regional economies.

More details about the Quarterly Economic Monitor can be found here: https://www.infometrics.co.nz/product/quarterly-economic-monitor