Introduction

This report provides an analysis and assessment of the current economic situation within the Taupo district, trends over the past year to the end of June 2011 and the economic outlook for the year ahead. The base information for the analysis is sourced from a range of economic agencies including Statistics New Zealand, Infometrics economic consultancy in Wellington, the New Zealand Institute of Economic Research also based in Wellington and trading bank reports. Growth comparisons with the wider Waikato region and the country as a whole are included in the analysis, where appropriate. Appendix 1 to the report presents a range of annual economic indicator results for the district, covering the March years since 2007.

Trend Summary

• The main local economic gains that occurred at the Taupo district level over the latest year ending March 2011 were the significant increase in new commercial/industrial buildings consented, increase in total nominal terms retail spending, significant rise in new vehicle registrations, improved home affordability and increased consumer confidence.

• The main local economic indicator losses that occurred over the year included reduced new dwelling and farm buildings consented, lower house sales and a decline in visitor activity levels.

• Positive overall real inflation-adjusted economic growth of 2.7% was recorded in the district during the last March year, following the negative growth of the March 2009 year and the relatively limited growth of the March 2010 year.

• Industry growth in the Taupo area over the past four years since the beginning of the major international economic downturn has been strongest for the communication services, Government administration, electricity/gas/water provision and primary industry sectors, and has been most negative for the processing/manufacturing, construction and tourism/hospitality sectors.

• The forecast significant lift in international commodity prices over the next 4 years should be beneficial for the district's sheep/beef, dairying and forestry industries in particular.

• Annual levels of visitor activity continue to fall in the district; however, visitor night-stays over April/May this year were ahead of the same period last year.

• NZ Institute of Economic Research June 2011 quarter business confidence results for the Taupo district indicate an overall slightly optimistic view by the local business community on the general business outlook for the coming year, despite the fact that most individual confidence factors for the district continue to fall overall.

• Total employment in the district rose 1.9% over the March 2011 year; and in March this year the rate of unemployment stood at 5.3%, compared to 6.6% nationally.

• Key economic issues facing the Taupo district at the present time include the economic impacts on the Taupo township of the new state highway bypass, impact of national retail franchises and the continuing downturn in visitor arrivals into the district.

Taupo Business Confidence

• On balance, Taupo firms are slightly optimistic overall with regard to the national and local business outlook for the coming year. In March this year, Taupo businesses were decidedly pessimistic overall. In June 2011, Taupo businesses as a whole were not as optimistic about the shorter-term economic situation, as businesses were nationally.

• On balance, in the June quarter this year, Taupo businesses were finding it significantly difficult overall to recruit skilled labour. This situation has steadily gained momentum since the end of last year.

• As with firms throughout the country, the lack of sales continues to be the major constraint facing businesses at the present time. Labour and finance are other noticeable limiting factors. 
  

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