Labour demand and wages continue to lift in Canterbury

• The ASB Cantometer lifted again in August, rising to 1.
• Increased employment demand and wage growth continue to contribute to a broadening in Canterbury’s economic recovery.

 
ASB’s Cantometer Index continues its steady climb upward, rising to 1 in August supported by further increase in employment demand in Canterbury and stronger wage growth.

ASB Chief Economist Nick Tuffley says, “Labour demand in Canterbury continues to lift, led by rebuild activity. According to the Quarterly Employment Survey (QES), construction employment is now very close to its previous highs recorded during 2006-2007 at the end of the previous construction boom.” Mr Tuffley notes, “The outlook is promising with consent issuance, an indicator of demand in the pipeline, well above previous peaks and job growth is likely to continue in this sector over the coming year.”

The lift in employment will not be isolated to construction, with many other industries also enjoying strong growth and increased employment opportunities.

Mr Tuffley says, “The lift in population has stimulated additional demand in the hospitality sector – this area was one of the hardest hit economically in the wake of the earthquakes and closure of the CBD.”

The QES measure of wage growth shows a significant lift in Canterbury wages relative to the rest of the country. Mr Tuffley says, “As employment increases in the region and skill shortages emerge, wages in Canterbury will outperform the rest of the country to encourage a shift in labour resource to the region.”

Outlook
The New Zealand and Canterbury economic recovery is starting to broaden beyond construction. Consumer confidence has steadily improved and retail spending has increased strongly in recent quarters. “While current inflation pressures are subdued, it is widely expected inflation will quickly lift over the coming year as the economic recovery strengthens. We continue to expect the RBNZ will start to lift the OCR from March 2014,” concludes Mr Tuffley.
  

About the Cantometer

The Cantometer is designed to summarise activity in Canterbury. The study takes a range of publically available regional economic data, which are standardised and aggregated into a summary measure. The index has been rebased to zero in June 2010 (the end of the quarter immediately preceding the first earthquake) such that a positive number represents activity being above pre-earthquake levels.

Along with the aggregate Cantometer index, there are five sub categories: Construction, Housing, Employment, Consumer spending and Miscellaneous*.
These sub-indices will provide some insight into which sectors are driving the rebuild activity at a given point in time. 

For most activity the data reference the level of activity. However, when incorporating wages and house prices into the index we believe levels are less informative. Instead the index uses prices relative to the rest of the country.
An increase in relative prices is a signal for resources to be reallocated to the Canterbury region. 

The historical Cantometer series represented on the charts is a simple average of the complete set of data for each month. 

*The miscellaneous category includes electricity, car registrations, guest nights and permanent and long-term net migration. A common factor driving these areas will be population growth, and we expect all these indicators to increase as the rebuild gathers momentum. 

ENDS

Note to editors
This edition of the ASB Cantometer index is embargoed until 5am on 28 August 2013.

Released by Marise Hurley, ASB Corporate Communications
Mobile 021 306 311
Marise.Hurley@asb.co.nz
http://www.asb.co.nz