Property editor of the NZ Herald

Auckland economy growing, says latest research

City beating 10-year average, helped by finance and booming real estate sector - report.

Auckland is predicted to have one million more people by 2040. Photo / Natalie Slade
Auckland is predicted to have one million more people by 2040. Photo / Natalie Slade

Auckland's economy grew by 2.8 per cent last year, ahead of its 10-year average and powered by finance, professional services and a booming real estate sector, says a report.

Geoff Cooper, Auckland Council chief economist, issued his third quarterly report today on the city's gross domestic product and said Auckland had performed well.

Although the three top-performing sectors were not necessarily employing more people, they were the fastest growing based on their contribution to the region's GDP, Cooper said.

Auckland's population grew by 3875 people annually via migration - excluding natural growth from the existing population - compared with New Zealand's total loss of 5040 people in the year, he found.

"At 3875 people, annual net migration in 2012 was at its lowest level in over 10 years. Arrivals appear to have plateaued but Aucklanders are still leaving for abroad - over 31,000 left in the 2012 year," Cooper said.

"Migration data suggests that the rate of departures has slowed recently, particularly over the last two quarters," he said.

"This is a positive sign for advancing Auckland's economic growth potential through gains in productivity and the size of Auckland's labour force."

An extra one million people are projected to be in Auckland by 2040. Cooper said two-thirds would come from natural growth in the existing population and the rest from migration.

"When you're looking at migration, it's quite low in Auckland now and we're below on that because of elevated departures, mainly to Australia which is growing faster than us," Cooper said.

"But the 30-year population growth figures for Auckland smooth out economic cycles and give a long-term trend which remains on track."

Aucklanders earned more than people living elsewhere but they also pay much higher house prices and rent and youth are more likely to be unemployed.

Retail sales in Auckland are growing faster than elsewhere in New Zealand, up 3.3 per cent over the 2012 year, compared with a 2.6 per cent rise elsewhere.

Manufacturing was continuing to contract in Auckland but Cooper said conditions would improve as construction picked up - every $1 of building activity generated 48c in the manufacturing sector.

Auckland's 10-year average growth is 2.5 per cent.

The rest of New Zealand grew faster than Auckland at 3.1 per cent for 2012, Cooper said.

Auckland's unemployment rate stood at 7.2 per cent in the last quarter of 2012, slightly ahead of New Zealand's 6.6 per cent, he found.

The number of Aucklanders employed in the last quarter of last year rose by 20,700 to 712,000 workers, which Cooper said was most likely a reflection of increased season-specific hiring over the Christmas period.

Auckland unemployment fell from 8.6 per cent in the the third quarter last year to 7.2 per cent at the end of the year after 11,300 people "dropped out of the labour force, no longer counted as officially employed or unemployed" and may be choosing to study, retire or look after families, Cooper said.

He has a positive outlook.

"Sustained business optimism and growth in economic activity should spur businesses to take on more staff in the longer term, leading to better labour force outcomes for Aucklanders," Cooper said.

"Businesses are likely to be using up spare capacity before taking on new staff. On average, employees worked 28 minutes more per week in the fourth quarter compared with the third quarter of last year."

This year's outlook looks positive for Auckland with 14 per cent of firms reporting an increase in domestic trading activity in the first three months.

The drought would affect growth in 2013, although its effects will be more limited in Auckland, he said.

- NZ Herald

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