Manawatū’s economy remains active, performing well compared to the rest of New Zealand. Data from Infometrics indicates a busy regional economy due to many factors, with highlights including low unemployment rates, ongoing activity in construction and tourism and strong sector confidence.
CEDA’s CEO Jerry Shearman says while our economic resilience gives us confidence, we do acknowledge that the future remains challenging as Omicron numbers continue to rise and businesses do their best to operate in a challenging environment.
“Not only are we faced with the suite of impacts that come with the pandemic, but New Zealand is also facing a significant cost of living increase with record breaking grocery and fuel prices putting extra pressure on our communities”, says Shearman.
Manawatū’s economy remains robust experiencing an 8.1% increase in the year ended December 2021, compared to the same timeframe a year previously.
Comparatively, New Zealand GDP is estimated to have increased by just 5.5% in the year to December 2021.
Our 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% from the previous year while employment in New Zealand increased by 1.7%.
Construction activity being at an all-time high, combined with the large public service sector in the region – encompassing the defence force, health care, education and strong research and tech sectors – have kept the economy strong, and people secure in jobs contributing to our regions strong level of employment.
The annual average unemployment rate in Manawatū has reached an all-time low, sitting at 3.1% and outperforming the national unemployment rate of 3.8%.
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 says CEDA’s Talent and Skills Manager Sara Towers.
“The ‘great resignation’ is occurring around the world, with people looking to step up their career, seeking work environments that align to their values, improving their earning potential and seeking increased job satisfaction.”
“In New Zealand 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”, adds Towers.
Consumer spending in the region rose by 9.7% from the year to December 2021 compared with an increase of 5% for New Zealand.
Local cardholders spent 84% of their electronic card spending at local merchants compared with 82.2% in the December 2020 quarter, showing strong loyalty and support for local businesses.
Domestic tourism also continues to climb with more New Zealanders taking the opportunity to explore the outdoors, and our region is reaping the benefits with steady signs of growth.
International visitor spending in the region was $16 million in the year ended December 2021, increasing by 23% from the previous year, while New Zealand endured a 44% decline.
Total tourism spending in the region was $309 million in the year ended December 2021 increasing by 16.6% from the previous year, while New Zealand increased by just 3.9%.
For Manawatū, our total visitor spend is 55% of what it was in February 2020, prior to COVID-19 hitting our shores.
CEDA’s Marketing and Communications Manager Janet Reynolds says we anticipate a dip in the coming quarter, as Omicron impacts people’s ability and willingness to travel.
“With borders opening we will see a lot of our Kiwis head home to catch up with friends and whānau after years of being apart”, says Reynolds.
Additionally, The Spending Plans survey for February showed that the number of people planning to spend more on a domestic holiday in the next three to six months has dropped to a net 1% negative. That compared to 27% of those surveyed in December who planned to spend more.
Other indications include the latest commercial accommodation data from FreshInfo showing a 5% increase in guest nights in the region in January from January 2021, while national guest nights declined by 10%. **This does not include AirBnB or social housing.
“While accommodation is still down on pre-COVID-19 levels, we are the strongest in New Zealand.”
“This is down to a mix of the high number of contractors traveling to the region to support our diverse sectors, business and health travel, leisure, and visiting friends and whānau”, adds Reynolds.
Manawatū experienced another increase in new residential building consents with a total of 185 in the December 2021 quarter, compared with 144 in the same quarter in the previous year.
Over the year to December 2021, both consent values and the number of new dwellings consented in the region hit record highs.
The fundamental strengths of the regional economy supported private investment in the region in 2021 says Stacey Bell, Senior Economist at Manawatū District Council.
“Central government investment in the region also really took off, with $75.5 million in consents issued for the upgrade to Ōhakea Air Force Base alone in 2021.”
Palmerston North City Council Economic Policy Advisor Peter Crawford adds, “Major government consents during 2021 including $52 million at Linton, $22 million Massey University veterinary school, $17 million Palmerston North Hospital and $4 million for strengthening of the Police building all contribute significantly to this total”.
“There is $8 billion of investment in the pipeline within the region, and of that, a total of $5 billion is planned for central and local government projects to 2035. Alongside the strong commercial investment, public investment will continue to provide substantial support to the regional economy over the next ten plus years”, says Bell.
As well as residential consents, non-residential consents to the value of $255 million were issued in the region during the year to December 2021, an increase of 16% from the previous year. National consents increased by 17% over the same period.
House prices continue to climb with the average current house value in Manawatū up 26.3% in the year to December 2021 compared with a year earlier.
Growth underperformed relative to New Zealand, where values increased by 27.3%. The average current house value was $733,569 in Manawatū in December 2021. This compares with $1,028,097 in New Zealand.
Vendors need to prepare to be on the market longer and expect a lower number in attendance at open homes, and comprehensive marketing is more important than ever to draw the attention of buyers
Blair Alabaster at Property Brokers says the market is cooling off compared to recent sales.
“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”, says Alabaster.
As we know, house prices across the country have peaked to new highs over the last twelve months, driven by incredibly low interest rates as well as demand outstripping supply.
“The median house price saw an increase from $660,000 in January to $700,000 in February suggesting higher valued homes propping up the sales figures based on lower volumes of sales” Alabaster adds.
It appears in recent months the market has seen a pivot with the annual value growth curve beginning to flatten driven by stricter lending restrictions.