Infometrics has called out early signs for touch conditions about to hit regional economies amid tentative signs of a turnaround.
There are some early, small, tentative signs of a turnaround according to Infometrics’ latest monitoring of regional economies, but tough conditions remained for many areas and sectors at the end of 2024.
Provisional estimates from the December 2024 Infometrics Quarterly Economic Monitor point to economic activity being 0.5 percent pa lower over the 2024 calendar year compared to 2023 – although the quarterly trend does show a slight improvement.
“Economic activity remains lower than a year ago in many industries and across different regions, although there are signs of improvement showing through,” said Infometrics Chief Executive and Principal Economist Brad Olsen.
“Metro areas are doing it the hardest, with a 0.6 percent pa decline over the 2024 calendar year. Regional economies are challenged too, with a 0.3 percent pa decline, but rural areas have rallied to see a 0.1 percent pa expansion over 2024, with stronger primary sector activity starting to unlock more growth.”
“Stronger export returns across the primary sector are starting to support activity across provincial and rural New Zealand, with strong returns for dairy, beef, and horticulture, and improving returns for lamb – although forestry returns remain poor,” said Olsen.
The current NZD 10/kgMS Fonterra farmgate milk is set to help deliver a NZD 19.2b pay-out in the current season.
“At that level, the pay-out would be the largest ever, up NZD 4.5b from last season. Other parts of the sector are strong contributors too, with beef prices up 8.8 percent pa on average over 2024 and lamb prices recovering. Kiwifruit export values were up 44 percent pa, apple exports up 14 percent pa, and fish exports up 7.6 percent pa. All in all, the primary sector is helping drive the start of the economic recovery.”
Tourism activity also had a stronger end to 2024, with rising international arrivals and slightly more domestic travelling.
Construction and manufacturing activity has been more limited. Non-residential consent values over 2024 were 0.9 percent lower than a year earlier, and residential consent numbers were 9.8 percent pa lower too. Manufacturing activity has been generally in decline for much of the last two years, although recent data suggests a slight uptick at the start of 2025.
“Job losses continue to be felt across most of New Zealand, with filled jobs falling across all regions except for Otago in December 2024 compared to a year ago,” said Olsen.
The average decline nationally was 1.6 percent pa, with regional economies in Nelson (-3.1 percent pa) and Gisborne (-3.0 percent pa) seeing the largest drops.
“Otago saw a small 0.1 percent increase, with Canterbury and West Coast seeing the smallest falls. Job ads have continued to plateau, at low levels, which suggests a turn in the labour market may be approaching.”
“Recent indicators suggest that parts of the economy are showing some early, small, tentative signs of a turnaround. Spending activity improved in the December quarter, and recent data for early 2025 has shown an expansion in manufacturing and services activity. These slight improvements reinforce expectations of shifting economic gears in 2025, as household spending is freed up and economic momentum is regained.”
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