Infometrics report: Economic rebound evident in Western Bay

Priority One's latest Infometrics report showed GDP dropped only 1.7pc in September. Photo / Getty Images

The Western Bay of Plenty economy has bounced back despite the impacts of Covid-19, which caused widespread business pain and job losses post lockdown.

With Jobseeker Support numbers dropping, a low unemployment rate and a post-lockdown spending boost, local business leaders are confident the region is "in good shape" - for now.

Priority One's latest Infometrics Quarterly Economic Monitor report showed GDP in the Western Bay fell just 1 per cent in the year ending June and only 1.7 per cent in September.

Priority One has been tracking economic measures monthly since lockdown in April.

Priority One chief executive Nigel Tutt. Photo / File

Chief executive Nigel Tutt said early signs of job losses and business pain six months ago had been steadily superseded by a rebound in most economic measures.

"We are confident the Western Bay economy is in good shape," he said.

"We were strong going into Covid, and our businesses have shown resilience and ability to adjust to change quickly.

"Consumers are spending, and people are largely employed. For now, Western Bay is doing well."

Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / George Novak

Tauranga Chamber of Commerce chief executive Matt Cowley said the Western Bay was doing well, for now.

"Our exporters continue to be in high demand by overseas markets. Many of New Zealand's trading markets are also recovering well, including the primary markets of Australia and China.

"Many businesses are wary of what things may be like this time next year as most governments have exhausted their economic stimulus packages, the risk of future Covid outbreaks, and governments start to focus on paying down debt."

Cowley said the Government and RBNZ's spending since the first lockdown had supported the economy as we all had hoped.

"The country's GDP for this quarter is expected to have almost fully recovered. Many businesses are telling me that they are incredibly busy until well into the New Year."

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The Staffroom Ltd Tauranga director Jill Cachemaille said there had been steady growth in clients since coming out of lockdown.

"Our clients have continued to recruit new staff for new roles, some have been replacement positions but a lot have been for new jobs.

"I am confident that the New Year will bring more opportunities for candidates seeking jobs as typically this would be a busy period.

"Employers are feeling confident about the economy and responding accordingly."

The report showed local Jobseeker Support numbers in the Western Bay started to drop in September and October underpinning a low unemployment rate of 3.7 per cent, with job advertisements rising since June.

Annual spending in the region was down just 0.8 per cent, meaning the post-lockdown boost had almost made up for the bottoming out on April/May.

Health enrolments are up 3.5 per cent annually, as a proxy of population growth, with population estimates indicating 208,000 people now live in the Western Bay.

Multiple factors have helped drive house prices up – money not being spent on international travel, very low deposit interest rates meaning no returns to be made, and people wanting to improve their housing, or add to their investments.

Tauranga City has record median house prices for the last three months running, reaching over $800,000 in October at $810,000. Western Bay of Plenty was not far behind at $730,000.

Meanwhile, provisional estimates from Infometrics show that the Rotorua economic activity fell 3 per cent in the September quarter, contributing to an annual decline of 4.6 per cent in the September 2020 year.

But while Rotorua continues to suffer the effects of Covid-19, business investment in the district shows signs of recovery with the forestry sector offering some relief to a battered economy.

Non-residential consents rose 3.6 per cent in the September 2020 year. The ANZ Commodity Price Index shows in September 2020, forestry export prices were up 2 per cent per annum.

Rotorua Chamber of Commerce chief executive Bryce Heard said the economic indicators for the September quarter were "a lot better than we would have forecast a few months ago".

The statistic that "catches the eye" was the 32.4 per cent drop in Rotorua's residential consents compared to a 3.5 per cent rise for the rest of New Zealand.

"Given our housing shortage in Rotorua, that is one area that causes concern and is no doubt driving up the cost of houses."

Heard said the 18 per cent fall in tourism expenditure due to borders remaining closed to international tourists was less than expected.

"Given Rotorua's big tourism exposure, it could have been a lot worse and domestic tourism has helped to hold this up."

Red Stag Timber chief executive Marty Verry said the business was seeing wood processing running at near capacity this summer.

"It is planning increased capacity through the sawmill for 2022 onwards and will open its new CLT mass timber facility early in 2021.

"Recruitment is under way, filling up to 20 roles initially."

Verry said forest owners were also doing well currently.

"China's ban on logs from Australia is being seen as an opportunity, as well as a reminder of the risk of New Zealand's reliance on China for 80 per cent of its log exports.

"There is a strong recognition now of the need to support local processing."

Destination Rotorua interim chief executive Andrew Wilson said while many Rotorua businesses continued to suffer the effects of Covid, it was encouraging to see some signs of recovery and economic results that were better than earlier forecasts.

"The uplift in consumer spending is a likely result of the commitment to buying local and we are also getting lots of feedback that New Zealanders on holiday spend more in the central retail area than international visitors usually do."

While total tourism spend was down year on year, Wilson said the lack of international tourists was partly offset by an increase in domestic spend.

"It's great to see New Zealanders exploring their own country and supporting the visitor industry and we hope to see that continue throughout the summer."

Wilson said housing continued to be a challenge for the district with the population growing at a much faster rate than housing stock.

"This will remain a priority area of focus for a number of local and central government agencies here."