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Economic analysis: How lockdown 2.0 affected Bay of Plenty

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Early indicators suggest Bay of Plenty’s economic recovery from lockdown 2.0 may be stronger than the region’s recovery following the first nationwide lockdown last year, Infometrics analysts suggest.

However, the region’s reliance on Auckland for manufacturing and supply of goods, as well as domestic tourism, will restrict further bounce back while the Super City remains at higher alert levels.

Other economic analysis shows moderate dips in business confidence in September, though New Zealand Institute of Economic Research says businesses reported a softening in costs and pricing in the September quarter.

The ANZ Business Outlook for September states that despite current activity being crimped by lockdown restrictions, medium-term indicators, including employment intentions, activity outlook and export intentions, are broadly robust.

Card spending activity from Marketview (released before parts of Waikato and Northland moved to Alert Level 3) showed a strong bounce back across New Zealand - excluding Auckland - after the moves to Level 3 and then Level 2 Delta.

Infometrics’ analysis shows card spending outside of Auckland was down 45 per cent from usual levels at Level 4, before improving to a 33 per cent drop at Level 3.

For the first 17 days of Level 2, spending outside Auckland was sitting 6.4 per cent above 2019 levels, with a significant 25 per cent lift on the first day of Level 2.

This response is likely due to a stronger underlying optimism about economic and employment situations this time around, compared with the fear and uncertainty following the first nationwide 2020 lockdown, Infometrics analysts suggest.

However, the distribution of spending remains uneven. While grocery spending remains strong, harsher Level 2 restrictions mean the hospitality sector remains hard-hit.

The limitations on manufacturing activity while Auckland was at Level 4 will continue to have significant impacts for the whole New Zealand economy, with supply issues likely to persist until production can work through a backlog of orders (read more here ).

See Infometrics’ full analysis here.

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Thursday, October 14, 2021

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