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The building and construction sector continues to log large increases in activity, with new house building leading the way.
Residential consents issued for the year to January stood at 24,780, the highest annualised total since nearly seven years ago in early 2008. These figures are backed up by data on work completed. The quantum of residential building work in the last year was more than 20 percent up on the previous year, and close to 60 percent up on that of 2011. The level of activity as measured by residential work completed is back to where it was around the beginning of 2008.
The recovery in non-residential work, however, is not as impressive. Nevertheless, activity has surged well above those of the previous year. In particular, the quantum of non-residential work completed over the past year was up 13 percent, with the latest 3 months being 15 percent higher than year-earlier levels. Further, in a signal that heightened levels of activity are set to continue, consents for non-residential building (measured in terms of square metres) over the latest 3 months was 12 percent up on year-earlier levels.
Delving deeper into the detail, the shops, offices, and farm building sectors are set to drive the growth in non-residential construction. All three categories see consent growth well over the 20 percent mark.
Auckland and Canterbury account for more than all of the growth in consents in the offices and shop buildings sector. This means that growth in consents across the rest of the country in these sectors remains negative.
However, the picture across the regions is brighter in terms of farm buildings. Likely a result of previous year’s favourable prices, large absolute increases in farm building consents over the past year have been registered in Taranaki, Manawatu-Whanganui, Otago, and Southland. Additionally, double-digit percentage rates of growth have been recorded in Bay of Plenty, Gisborne, Hawke’s Bay, Tasman, and West Coast.
Growth in retail sales is gradually accelerating, with transactions in the core retail sector for the 3 months to January up 5.5 percent on those of a year earlier. This is noticeably higher than the 3 to 3.5 percent rates of growth experienced through 2013.
Above-avearge growth is being recorded in sales in the consummables sector (supermarket and other food outlets), as well as sales in the hospitality and services sectors. Growth in the latter two sectors is likely to be related to the robust expansion in tourism numbers experienced over the past 12 to 18 months.
In contrast, sales of durables (e.g. electronics, whiteware and funiture) is growing at below average rates, while the retail apparel sector continues to experience falling sales. Both these sectors have been subject to heavy price discounting in addition to the impact of the NZ$ exchange rate also putting a lid on prices. These factors have played a large part over recent times in restraining sales growth in the durables and apparel sector.
Outside of the core retail sector, motor vehicle sales surged to double-digit rates of growth through early 2014. However, this growth has recently eased – with the 3 months to January at a still buoyant 7 percent up on those of a year earlier.
At the same time, fuel sales were some 7 percent down on year-earlier levels. This was a direct consequence of the recent decline in fuel prices.
The number of international visitors has continued its strong upward trend established in late-2013. As a result, visitor numbers for the year to January 2015 totalled just under 2.9 million, over 4 percent up on those of a year ago, and well up on the 2.5 million recorded in the January 2013 year.
Over the latest year, visitors from Australia grew by just over 3 percent, with much stronger increases being recorded in visitors from China (8 percent), the Americas (8 percent) and Europe (4 percent). While the largest proportion of visitors continues to come from Australia (44 percent of the total), visitors from Europe (15 percent), the Americas (over 10 percent), and China (nearly 10 percent), remain a significant share of NZ’s tourism market.
The latest surge in numbers, especially of those not from Australia, is now being reflected in a strong upswing in guest night numbers. With Australian visitors dominating the VFR (visiting friends and relatives) sector, the faster growth in non-Australian visitors flows directly through to the commercial accommodation sector.
Consequently, international guest nights are now higher than at any time in the past 6 years, with the latest year totalling close to 6 percent up on the previous year. Indeed, a recent acceleration sees the latest 3 months over 9 percent up on year-earlier levels. This contrasts with the domestic guest nights scene, which is showing a more muted 5 percent rate of growth.
Promisingly, the resurgence in international guest nights is being registered across almost all regions. In particular, the fastest growing regions over the past year are, without exception, in the South Island. This is a consequence of the welcome acceleration in the Christchurch economy and its quake-recovery programme. As the front door for the South Island tourist sector, it was imperative that Christchurch activity recovered in order for tourism across the remainder of the mainland (and, indeed, country) to experience more robust performance.
The dramatic surge in net migration inflows continues apace. The year to January saw a historic high of a net 53,800 new migrants enter New Zealand. This figure was the difference between a gross inflow of 111,500 (up from 95,200 a year ago) and a gross outflow of 57,700 (down from 69,500 a year ago). In absolute terms the net inflow figure is by far a historical high for New Zealand.
With the net migration gain equivalent to about 1.2 percent of the resident population, the current migration surge is amongst the highest in percentage terms in our post-WWII history. It is similar to the 1952/53 net inflow of over 22,000, which was about 1.1 percent of the population. More recently, the 2002/03 net inflow was also about 1.1 percent of the population, while the 1973/74 net inflow was close to 0.9 percent of the population.
However, for a period of sustained net inflows one has to go back to the 1960s when there were 6 consecutive years of net migration rates contributing more than 0.5 percent of the population.
Much of the latest inward migration surge can be accounted for by the striking changes in flows of New Zealand citizens across the Tasman. The decline in departures of Kiwis, to across the ditch, has turned down considerably in the past 18 months.
Also of interest over the recent period has been a noticeable upturn in New Zealand citizens returning from Australia. Over the 15 years from 1995 to 2010 the number of Kiwis returning has consistently totalled less than 10,000 per year. However, the last couple of years have seen this flow increase, with the number of New Zealanders returning from Australia now close to 16,000 per annum.
It appears that as the glow of job and income prospects in Australia has been diluted, the impact on New Zealand’s migration numbers is to an extent unavoidable.
Consequently, whether the latest historic high in net migration to New Zealand is a one-off, or the beginning of a lengthy period of significant migration gains for New Zealand, is likely to be dependent on the relative performance of the New Zealand and Australian economies.
While every effort is made to ensure that the information, opinions and forecasts included in this publication are accurate and reliable, BERL and all contributors do not accept responsibility for any errors or omissions, or for any loss or damage resulting from reliance on or the use of information, forecasts or opinions it contains.
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