Strong local economy outstrips rest of NZ

Manawatu¯ ’s economy remains robust experiencing an 8.1 per cent increase in the year ended December 2021, compared to the same time frame a year before, according to figures released by the Central Economic Development Agency (CEDA).

Comparatively, New Zealand’s GDP is estimated to have increased by just 5.5 per cent in the year to December 2021.

Manawatu¯ ’s strength in economic activity is higher in comparison to the rest of the country due to growth in construction and soaring prices for meat and dairy products. The growth rate for New Zealand was affected by the longer period in higher alert level restrictions in the upper North Island.

Employment in the region jumped 2.1 per cent from the previous year while employment in New Zealand increased by 1.7 per cent.

Construction activity being at an all-time high, combined with the large public service sector in the region have kept the economy strong, and people secure in jobs contributing to our regions strong level of employment.

The annual average unemployment rate in Manawatu¯ has reached an all-time low, sitting at 3.1 per cent and outperforming the national unemployment rate of 3.8 per cent.

With low unemployment rates combined with a buoyant job market, employers need to consider how they are going to manage vacancies and retain their current workforce said CEDA’s talent and skills manager Sara Towers.

“With the cost of living increases, our labour market is thriving as people look to move to roles that support their economic needs, the flipside, however, is that it is increasingly harder for businesses to recruit, and employees have a smorgasbord to choose from.”

Consumer spending in the region rose by 9.7 per cent for the year to December 2021 compared with an increase of 5 per cent for New Zealand. Local cardholders spent 84 per cent of their electronic card spending at local merchants compared with 82.2 per cent in the December 2020 quarter.

Domestic tourism continues to climb and international visitor spending in the region was $16 million in the year ended December 2021, increasing by 23 per cent from the previous year, while New Zealand endured a 44 per cent decline.

Total tourism spending in the region was $309m in the year ended December 2021 increasing by 16.6 per cent from the previous year, while New Zealand increased by 3.9 per cent.

CEDA’s marketing and communications manager Janet Reynolds said we anticipate a dip in the coming quarter, as Omicron impacts people’s ability and willingness to travel.

Manawatu¯ experienced another increase in new residential building consents with 185 in the December 2021 quarter, compared with 144 in the same quarter in the previous year.

Over the year to December 2021, consent values and the number of new dwellings consented in the region hit record highs.

Stacey Bell, senior economist at Manawatu¯ District Council, said, “Central government investment in the region also took off, with $75.5m in consents issued for the upgrade to O¯ hakea Air Force base alone in 2021.”

Palmerston North City Council economic policy adviser Peter Crawford said major government consents during 2021 included $52m at Linton, $22m at Massey University veterinary school, $17m for Palmerston North Hospital and $4m for strengthening of the Police building.

“There is $8 billion of investment in the pipeline within the region, and of that, a total of $5b is planned for central and local government projects to 2035,” said Bell.

As well as residential consents, non-residential consents to the value of $255m were issued in the region during the year to December 2021, an increase of 16 per cent from the previous year. National consents increased by 17 per cent over the same period.

House prices continue to climb with the average current house value in Manawatu¯ up 26.3 per cent in the year to December 2021 compared with a year earlier.

Growth underperformed relative to New Zealand, where values increased by 27.3 per cent. The average current house value was $733,569 in Manawatu¯ in December 2021. This compares with $1,028,097 nationally.

Blair Alabaster at Property Brokers said, “The local housing market has entered a ‘cooling’ phase with the median days on market currently sitting at 56 days.

“This is a stark contrast when compared to 2021 average days, which saw houses sit for around 27 days for much of the year.”