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Nelson Regional Economy

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Nelson Regional Economy Tracking the Nelson regional economy July 2009 This report was produced with the assistance of The New Zealand Institute of Economic Research (NZIER) The Nelson Regional EDA wishes to acknowledge and thank the Nelson Regional Airport for their support Preface Welcome to the first release of the Nelson Regional Economic Development Agency’s quarterly report to monitor the Nelson regional economy, Tracking the Nelson Regional Economy. The EDA has three key strategic objectives: Bill Findlater, CEO • facilitate economic development projects that build national and international competitiveness • provide economic advice to the Region • provide ongoing assessment of the Region’s performance. We acknowledge there are many generic quarterly reports on the economy but there aren’t any related specifically to our region using relevant comparative figures. With this report we’ve used three other regions that could be argued are similar to Nelson in character and therefore create a better base for comparison. The regions used are; Bay of Plenty, Gisborne/Hawkes Bay and Otago. Whilst it is acknowledged the country is experiencing a difficult economic climate, the report clearly demonstrates the greater Nelson region is holding its own relatively well. It also demonstrates that the myth of ‘Sunshine Wages’ in this region is just that, a myth! We greatly appreciate the valuable support of Nelson Airport Ltd in enabling us to commission NZIER to develop the report. We also acknowledge those people and organisations that were part of the consultative process in the initial stages of scoping the report. Although we haven’t been able to include all of your ideas, we believe NZIER has developed a report that will enable us all to consider relevant information when we need to make important business decisions. Bill Findlater CEO Nelson Regional Economic Development Agency Contents 1. Introduction 6 2. Purpose and nature of the Report 6 3. Relationship to the Nelson Regional Economic Development Strategy 7 4. Make up of the Nelson regional economy 8 4.1 Key characteristics of industry and firms 8 4.2 Key industries in Nelson-Tasman 9 4.3 Industries’ share of GDP 10 4.4 Distribution of employment 12 5. Indicators 14 5.1 What we have selected to monitor 14 5.2 Overall state of the economy 19 5.3 Outlook for the regional economy 25 5.4 Living standards 28 5.5 State of the regional labour market 34 5.6 Industry performance 41 5.7 Firm dynamics 52 Tracking the Nelson regional economy at a glance Nelson regional economy Overall state of Outlook for the Living The state of the Industry Firm dynamics the regional regional standards regional labour performance economy economy market Regional GDP General Individual Working age Tourism Business births business incomes population and relative to situation the labour force Building and deaths Regional GDP Household per capita construction Domestic incomes Labour force growth trading activity participation Horticulture and Regional GDP House prices related processing ? per worker Hiring intentions Employment Housing Forestry and Population Investment affordability Unemployment wood processing growth intentions Internet use Registered Seafood Net migration (no trend data unemployed yet) Marine Difficulty in engineering obtaining labour Scientific Qualifications of research the population Key Upward trend (this is positive for all indicators except unemployment) Downward trend (this is negative for all indicators except unemployment) ? Don’t have the data yet, but aim to in the future Mix of positive and negative results Key points for the Nelson regional economy • Like New Zealand as a whole, the region is experiencing an economic slowdown • The tourism and construction sectors are suffering in particular • Unemployment is set to rise • Housing is becoming more affordable • The region’s longer term prospects are enhanced by strong population growth, net migration and the increasing focus on added value (eg aquaculture) 1. Introduction The Nelson Regional Economic Development Agency is pleased to present this report. It is the first of a new series of quarterly reports to monitor the Nelson economy. Each one will give the latest data on a set of indicators. 2. Purpose and nature of the Report We initiated this project in order to get more reliable and consistent information on how well the Nelson economy is doing. At the same time, we wanted to ensure that it was as useful as possible to our funders, partners and other stakeholders. So one of the first things we did was talk with a cross-section of potential users of the report. This is what they told us: How the report would be used: • enhancing understanding of the region’s industry make-up • strategic decision-making • marketing • advocacy What the report should cover: • how the region is doing overall (in its own right and in comparison with NZ overall and other comparable regions) • how well off the people are (and how well off in comparison with NZ overall and other comparable regions) • how key industries are doing • how well firms are doing overall • what the future is likely to hold for the regional economy (lead indicators) The qualities that would make the report highly valued: • authoritative, unbiased • all in one place and easy to access (including links to other relevant information) • insightful commentary (on overall report and selected topics) • showing trends – not just snapshots • as up-to-date as possible The report will be refined and developed as we gain experience. Feedback from users will be a key input into this process. Tracking the Nelson Regional Economy 6 3. Relationship to the Nelson Regional Economic Development Strategy The Nelson Regional Economic Development Strategy (REDS) gives the following vision for the Nelson region: Smart, sustainable development that maintains economic diversity, preserves quality of life and does not degrade the region’s natural beauty and environment. Monitoring the regional economy won’t give the whole picture, but it will show a significant part of it. The REDS emphasises the connections among economic, social, environmental and cultural wellbeing within an overall sustainable development framework. This is consistent with the approach taken by the Nelson City and Tasman District Councils. The economy doesn’t function in isolation from the environment or society. This report is therefore part of a wider set of indicators of regional performance. By looking at progress across the indicators in this report, we will see what areas of the economy are doing well and what are off track. This will help us and the community see if the vision is being realised and help to target our efforts more effectively for the benefit of the region. Tracking the Nelson Regional Economy 7 4. Make up of the Nelson regional economy 4.1 Key characteristics of industry and firms The following information is important to understand the regional economy. It is less about how well the region is performing and more about its characteristics. Overview of the make up of the Nelson regional economy How often is it Characteristic What does it tell us? measured? Industry and firms Key industries in Nelson- Which industries the Annually Tasman regional economy relies on Unofficial series, updated Industries’ share of GDP Shape of regional economy quarterly by NZIER Industries’ share of GDP Whether shape of regional compared to New Zealand economy is different to Unofficial series, updated as a whole and reference national/reference quarterly by NZIER regions economies Distribution of employment Where region’s workers are by industry in Nelson- Annually employed Tasman Distribution of workplaces Whether regional economy and employment by has more or less SMEs or Annually workplace size in Nelson- larger firms than rest of Tasman economy Share of region’s Are region’s workers employment by workplace employed in SMEs or larger Annually size firms? Tracking the Nelson Regional Economy 8 4.2 Key industries in Nelson-Tasman The following table shows the distribution of firms by industry in Nelson and Tasman. It highlights the importance of primary industries (Agriculture, forestry and fishing) and the service sector. These categories are quite broad. We have broken them into more detailed industries in section 5.6 below. Figure 1 Key industries in Nelson and Tasman Geographical units in Nelson and Tasman Education & Training Public Administration & Safety Administrative & Support Services Prof'nal, Scientific & Techn Serv Rental, Hiring & Real Estate Serv Financial & Insurance Services Information Media & Telecomms Transport, Postal & Warehousing Nelson Accommodation & Food Services Retail Trade Tasman Wholesale Trade Construction Electricity, Gas, Water & Waste Serv Manufacturing Mining Primary Industries Support Services Forestry & Logging Aquaculture & Fishing Agriculture Agric, Forestry & Fishing 0 1,000 2,000 3,000 4,000 5,000 6,000 Source: Statistics New Zealand Tracking the Nelson Regional Economy 9 4.3 Industries’ share of GDP The following chart shows GDP by industry for the Upper South Island (Nelson-Tasman- Marlborough-West Coast) for the year to March 20081. Figure 2 Composition of GDP $m in 1995/96 prices Ownership of OO Dwellings Unallocated Govt Administration & Defence Health & Comm Serv: Personal & Other Serv: Education Finance, Insurance, Property & Business Transport, Storage & Communication Wholesale & Retail Trade: Accom, Cafes & Restaurants Electricity, Gas & Water Supply: Construction Other Manufacturing Food Beverage & Tobacco Manf'ing Natural Resources(1) Agriculture & Services to Agriculture 0 100 200 300 400 500 600 700 800 900 100 0 Source: NZIER Note: (1) “Natural Resources” includes Fishing, Forestry and Mining How does the region’s mix of industries compare with others? The region has similar shares of economic activity to New Zealand as a whole in most groups, with two notable exceptions: a much higher share in primary production (Agriculture, Fishing, Forestry and Mining), and a correspondingly lower share in services (Finance, Business Services, Social and Private Services). This has implications for the region’s growth potential, as services sectors tend to grow more rapidly than the primary sector.
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