While the lifting of Auckland’s three-day lockdown and Hawke’s Bay’s return to alert level one came too late to save the annual Art Deco Festival, the region’s economy has regained ground lost due to Covid-19 and has returned to growth.
Infometrics’ latest Quarterly Economic Monitor, which was released at the end of February, reported the region’s GDP for the 12 months to December 2020 up by .8%, compared to a 2.6% downturn experienced nationally.
However, it’s not all good news. Other indicators of our regional economic health are a mixed bag, with the unemployment rate and job seeker support numbers both rising compared to a year ago – the latter by a whopping 36.9% to now more than 7,000. That number however could ease this quarter as seasonal jobs increase over the harvest period.
Annual unemployment for the year to 31 December 2020 sat at 5.3% and while higher than NZ’s overall rate of 4.6%, it is still well below Hawke’s Bay’s peak unemployment figure in June 2013 of 7.9%.
Tourism spending was down 0.5% compared to a 15.6% decline for New Zealand overall, and while the ‘Baycation’ campaign was successful in attracting domestic visitors, the acid test will be the March quarter, and will take into account the cancelled Horse of the Year event.
On the positive side of the ledger consumer spending is showing no signs of slowing down, with spending up 2.5% for the year to December – with tills ringing to the tune of $609 million compared to $577 million the previous year. Of that total, $286m was spent in Hastings, $269m in Napier, $19m in Wairoa and $35m in Central Hawke’s Bay.
Infometrics says that nationally the outlook for spending in the upcoming quarters remains relatively bearish, and that the possibility of further lockdowns may well discourage discretionary spending.
Existing homeowners received Hawke’s Bay’s best economic news in the form of increased house values. The average house value was up 16.4% in December 2020 compared to the previous year and is outperforming the country’s overall house price growth, which was up 13%.
Infometrics says record low interest rates have helped lower the mortgage cost of housing and incredible house price growth and FOMO (Fear Of Missing Out) have encouraged buyers into the market. They expect the return of loan-to-value ratio restrictions to soften sales growth in the coming months.