Sun is shining, the weather is sweet in Hawke's Bay
Known for its wine and sunshine, both have helped Hawke’s Bay take out this Scoreboard’s gold medal, with strong retail sales as well as a fantastic summer predicted to boost fruit crops.
The region climbed three spots into top position this quarter with good times expected to roll on, according to ASB chief economist Nick Tuffley.
"It's top of the pops for the Hawke’s Bay in this quarter’s Scoreboard. The Bay posted solid numbers across the board this quarter. In particular, cash registers rang hot, with an 8.9% annual lift in retail spending – the highest growth rate in the country,"says Tuffley.
The Bay's housing and construction sectors were also strong this quarter, with house sales and prices both posting double-digit annual gains, and building consents up 38% in annual terms.
"On this basis and with the fantastic summer likely to result in good fruit crops, we anticipate the good times are likely to roll on for the Bay over 2019," says Tuffley.
Dunedin, rather than Queenstown, leads the way in boosting Otago to silver
Otago is back in five-star position this quarter, led for a change by Dunedin rather than Queenstown.
"In particular, the Dunedin housing market has found its wings and is propping up an otherwise sluggish Central Otago market. Jobs are also aplenty in the region, with an extra 6% generated over the year. On this basis, the good times may roll on to 2019, although we suspect Dunedin may continue to lead the way," says Tuffley.
House prices were up 9.4% on the previous quarter with construction up 11%.
Given the five star rating, it’s no surprise that Otago folk are happy with their economic lot, topping the nationwide consumer confidence measure.
Canterbury sported racing stripes this quarter, zipping into fourth place
Canterbury gained 11 places and two additional stars this quarter, putting it in fourth place just outside of medal contention, with four stars.
The region was the fastest mover for the last quarter of 2018, spurred on by 33% growth in construction, which looks set to continue throughout the year.
"The construction sector is likely to lead the way over 2019," says Tuffley. "Specifically, it looks like a growing number of key CBD projects have begun to fill the commercial building consents pipeline. Also, the accommodation sector is posting some solid growth and we wouldn’t be surprised to see fresh record highs in terms of guest nights this summer."
Retail sales were also at a high, with $2,605m spent for the three months – second only to Auckland’s retail spend.
"All up, Canterbury has plenty to look forward to over 2019,” says Tuffley. “The question is, can it sneak onto the medal podium over coming quarters?"
Auckland climbs out of last place, but housing is still on the weak side
Auckland's volatile Scoreboard run has continued, but in contrast to last quarter, this quarter’s move was in the right direction.
The City of Sails jumped six places to 9th overall on the Scoreboard, resulting in an additional star, however its housing market appears to be a tailwind.
"Auckland was the only region to post a house price fall over 2018,” says Tuffley. “Looking ahead, we wonder if improving Auckland housing affordability will hinder or promote activity in the region. Time will tell."
The jump was not all that surprising considering the fall in petrol prices Tuffley says, which would have come as a relief to Aucklanders who were bearing the brunt of fuel cost increases over 2018.
After moo-ving up last quarter, Waikato’s dairy fortunes push it back down
After climbing 10 places last quarter and taking out the silver medal, Waikato slid back to 12th place, losing a star in the process.
"It appears as we expected that Fonterra's lower milk price forecast spilled over into lower consumer confidence and retail spending. However, we expect the decline to be temporary.
"Fonterra has since lifted its 2018/19 milk price forecast range by 30 cents. Furthermore, the dairy outlook for 2019/20 is looking even better. In this sense, we don't expect the Waikato to be this low in the Scoreboard again over 2019," says Tuffley.
The full ASB Regional Economic Scoreboard, along with other recent ASB reports covering a range of commentary, can be accessed at our ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html