Island economic divide widens
Exports help the north, but the south needs tourists
Anorth/south divide is opening up as strong export prices and housing drive economic growth while tourist regions suffer, according to the latest ASB Regional Economic Scoreboard.
The North Island continued to outperform the south in the final quarter of 2020, fuelled by a booming primary sector while the tourism impacts of Covid-19 continued to bite in the south, the report showed.
Northland claimed its second consecutive top spot, followed by major primary producers Bay of Plenty, Gisborne and Hawke’s Bay in joint second place after bumper summer crops and strong results across most other indicators. At the other end of the spectrum, and the country, Tasman, Canterbury, Marlborough, Southland and Otago occupied the bottom five spots.
The scoreboard takes the latest quarterly regional statistics and ranks the economic performance of New Zealand’s 16 regional council areas. Ratings are updated every three months, and are based on measures such as employment, construction, retail trade, house prices.
ASB chief economist Nick Tuffley says several factors contributed to Northland holding on to top spot. “This quarter we were particularly impressed by the region’s job growth, which topped the poll at 4.8 per cent year on year.” The region was in the upper half for most other indicators too, like retail sales, residential construction, and house sales.
Otago was stuck to the bottom for the second consecutive quarter, still suffering from the lack of international travel. “The region’s low ranking is a perfect illustration of the struggles faced by the tourismdependent regions of the country, with Queenstown still suffering from the lack of international travel.” Marlborough dropped eight places to second last. The lack of tourists was a big factor, but building consents were its weakest point, with big yearon-year falls in both residential and non-residential consents.
Elsewhere, housing supply and demand were high across the board, with residential building consents and house prices both climbing to new highs over the fourth quarter and continuing into 2021.
Auckland staged a recovery — up four places to ninth — after a tough lockdown affected performance in the third quarter. The housing market was the region’s source of strength, with annual growth in residential consents (+22 per cent) and house sales (+65 per cent) near the top of the pack. But Auckland’s non-housing indicators were softer, with employment growth, new car sales and retail sales nearer the bottom.
The continued strong showing for Bay of Plenty and rise of Gisborne and Hawke’s Bay was driven by a strong performance by the horticulture sector. But housing was also playing a part. “Solid annual house price growth and residential consents were the star of the show in the Bay of Plenty, and over in Gisborne, annual house price growth outstripped the rest of the country at 31 per cent compared with the same time last year,” Tuffley said.
Canterbury lifted two slots but still lags at 13th place. Only its house sales were towards the top end of the rankings.
Wellington was one of the few regions where employment declined over the 12 months to December 2020, but the hot housing market kept it treading water at 11th.