This year is one of adjustment for the Christchurch economy.
That was the key message presented to more than 200 delegates who attended the Canterbury Development Corporation (CDC) Economic Update event today (Wednesday 8 June 2016).
CDC Chief Executive Tom Hooper, who spoke at the event, said while economic activity levels remain high, growth rates will continue to ease, unemployment levels will rise slightly from their historic lows and the housing market will plateau.
“These adjustments are all expected outcomes as the $40billion rebuild stimulus peaks and plateaus. The economy has grown quickly to the level it requires to complete the rebuild, so growth will slow.”
CDC was forecasting Gross Domestic Product (GDP) growth to ease to less than one percent in the current year. But there are high levels of activity around us because the rebuild is approximately 10 percent on top of the underlying economy.
“Christchurch will remain a busy place to live and work for several years,” Hooper said.
Publications released at today’s event included the Christchurch and Canterbury Quarterly Economic Report, produced by the CDC economics team, and The Canterbury Report, which gives economic oversight and features local businesses and their success.
The areas of focus at the economic update were:
Gross Domestic Product (GDP)
GDP is easing from the highs of 5.5 percent in 2014 to 1.8 percent in the year to December 2015 – dipping below national GDP for the first time since 2012. CDC is forecasting less than one percent growth in 2016. Despite easing GDP, activity levels across the region remain high: the value of economic output in Christchurch rose to a new high of $18.9bn in the 12 months to December 2015.
The workforce participation rate (the number of people over the age of 16 and in the workforce) continues to well exceed national averages at 72.1 percent compared to 69.5 percent nationally.
There has been a significant shift in the ability to recruit skilled labour at 22 percent South Island wide compared with a national average of 32 percent. This reflects the labour market scaling up to meet rebuild requirements and now moving into the rebuild plateau, freeing up skilled labour. We can expect some volatility in the labour market moving forward as we transition away from rebuild activities and skills are non-transferable.
|Labour market participation rate||72.1%||69.5%|
|Difficulty finding skilled labour (% balance finding it hard)||22%*||32%|
*South Island Source: Statistics NZ, NZIER, CDC
Christchurch and Canterbury continues to attract people from all corners of the world; in the twelve months to March 2016 5,835 (net) new residents moved to Christchurch. Over 65% of these migrants are here for reasons other than the rebuild economy.
A massive 79 percent of rebuild workers have indicated that they will stay in Christchurch if there was on-going work for them. The number of workers in Christchurch today is 19,000 higher than pre-earthquake levels.
Growing incomes, coupled with stabilising rents and house prices, are helping improve housing affordability in Christchurch. CDC now estimates it takes five years for a working age couple, saving 15 percent of gross income, to put aside a 20 percent deposit – down from five and a half years in 2014 and well below the eight and a half years in Auckland Central.
That same working age couple, over a 25-year mortgage, will commit 25 percent of their annual gross household income to servicing their mortgage – down from 28 percent in Christchurch in 2008 and significantly less than Auckland City, currently at 42 percent.
Source: CDC, Infometrics Ltd, NZIER and Statistics New Zealand