‘Short-lived’ bounce for regions
Economic activity staged a comeback in the December 2021 quarter as restrictions for the delta strain of Covid-19 were gradually eased at different times across the country – with mixed results.
Infometrics’ economic monitor for the reporting period shows activity rose by 2.8 per cent per annum in the quarter based on provisional estimates, with delayed demand after the delta restrictions being “unleashed” and a “reasonable” summer being enjoyed by many local economies.
“Activity showed a determined bounce in the December quarter as Kiwis started to spend more, travel resumed at higher levels, construction activity picked up further and jobs rose,” says Brad Olsen, Infometrics’ principal economist and director.
“However, this bounce-back has been short-lived with regional economies bracing for the disruption of omicron to restrict workforces, increase absenteeism and further stretch supply chains.
“Filled jobs numbers have continued climbing as demand remains high with jobseeker support numbers falling and the unemployment rate reaching a record low at the end of 2021.
“The value of building activity remains at record levels, commodity prices are strong, the milk pay-out is up and spending has rebounded in many sectors. These factors provide confidence for regional economic outcomes, but the challenges ahead are clear to see.”
Uncertainty and the hesitancy of going out also showed through in some regional areas at the end of last year.
Olsen, pictured, says: “With consumer confidence falling, there were increasing concerns about just how much New Zealanders would be willing to get out and about over the summer period.
“This challenge is increasing in 2022 with many staying home more through the omicron outbreak due to the risk of getting Covid-19, which has reduced activity in sectors such as hospitality and events.”
Economic growth in 2021 shows a mixed message of some strongly performing areas alongside areas that have seen a strong revival from a harder-hit 2020 period.
Compared to pre-pandemic levels, economic activity has been strongest across the central North Island, with Hawke’s Bay, Taranaki and Manawatū recording healthy gains.
“Primary sector-focused economies generally continue to see the strongest economic results. Areas that had a greater international tourism focus pre-pandemic and urban centres are recovering at a slower pace.”
Prolonged restrictions from the delta outbreak kept some local economies subdued during the December quarter. Activity in the upper North Island was more limited in the period with higher alert levels for Auckland and parts of Waikato. Aucklanders were isolated until mid-December and Northland was red under the traffic-lights systems during its usually busy summer months.
Higher inflation remains a concern, particularly in the provinces. It accelerated to a 30-year high of 5.9 per cent a year and was higher across provincial North Island centres at 6.7 per cent.
Olsen says: “Many regional economies are facing sustained inflationary pressures as supply is unable to keep up with demand and costs are going through the roof.”
