Growth set to continue

Economic activity in Tauranga city is soaring, says Infometrics' March 2015 quarterly economic monitor.

With increasing numbers of Aucklanders seeking affordable housing options and a retiring cohort of baby boomers, robust economic growth appeared set to continue, said Infometrics senior economist Benje Patterson.

Tauranga's economy grew by 3.6 per cent over the year to March, well above the estimated average growth in the national economy of 2.9 per cent per annum over the past two years, he said. The Tauranga economy also grew strongly by 4.4 per cent in the previous year.

"What's even more pleasing for Tauranga is that the growth has been broad-based across most indicators of spending and investment behaviour, which is giving businesses the confidence to go out and hire new staff," said Mr Patterson.

Tauranga's unemployment rate has fallen to just above 5 per cent compared with a peak of almost 7 per cent following the economic recession of 2008/09.

The Infometrics report said improved pay packets were flowing through into spending. With Tauranga boasting good job prospects and relatively affordable housing, there had been a sharp lift in interest in the city's housing market, particularly from those priced out of the Auckland market, pushing house sale volumes and flowing through into house prices and home building activity.

"Over the year to March, house prices in Tauranga climbed 5.1 per cent, while residential building consent numbers climbed by 16 per cent over the same period," said Mr Patterson.

The Tauranga City economy was also likely to stand up better than most of its neighbours in the face of low dairy prices, given that only 2.6 per cent of Tauranga's GDP was directly generated by the primary sector, he said.