The economy remains in the thick of it, with tough operating conditions in the September quarter according to Infometrics’ latest monitoring of regional economies. Despite falling interest rates, business conditions are difficult at present, with rising unemployment limiting spending and investment by households and businesses alike.

Provisional estimates from the September 2024 Infometrics Quarterly Economic Monitor show a flat level in economic activity in the September 2024 quarter compared to a year ago, with economic activity over the 12 months to September 2024 also unchanged from the prior year.

“This flat economic result at first glance appears stronger than other economic indicators are showing, but different industries and regions are feeling the pinch much more,” says Infometrics Chief Executive and Principal Economist Brad Olsen. “Provincial and rural areas are feeling the pinch the hardest, with a 0.3% and 0.4% annual fall in economic activity recorded respectively over the September 2024 year. Metro areas experienced a small, 0.1%pa, increase in activity.”

“Construction and retail trade – industries most exposed to higher interest rates – remain the hardest hit. Construction activity is lower than a year ago, and future work is set to remain lower than record highs set in recent years,” says Mr Olsen. Residential consent numbers over the 12 months to September 2024 were down nearly 17% from a year earlier, and non-residential consent values were down 6.4%pa over the same period.

“Households remain cautious with their wallets, with Marketview card spending data showing a 2.8%pa fall in spending in the September quarter,” says Mr Olsen. “Personal income tax cuts took effect during the September quarter, and interest rates eased more over the quarter, but the impact of these two changes haven’t hit the economy immediately.”

“The primary sector is providing some greener shoots, with dairy prices higher, meat prices recovering, and strong horticulture exports,” says Mr Olsen. “The current $9.50/kgMS Fonterra milk price, on current production levels, is set to deliver an $18.1b pay-out in the 2024/25 season, up $3.4b from the prior season.”

Job losses are hitting across the country, with a 0.5%pa drop in national employment in the September quarter. Job losses have spread further, with 12 of 16 regions showing filled jobs declines in the September quarter,” says Mr Olsen. “Higher unemployment is set to weigh on household spending until 2025, and until households refix onto lower interest rates now on offer.”

ENDS

Attachment – map showing employment growth by region

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