Nelson basks in economic glow
Economists usually get a rough ride in the eyes of the public. American Edgar R Fiedler, an economist himself, once opined that if you asked five economists a question, you'd get five different answers. "Six if one went to Harvard," he said.
Playwright George Bernard Shaw said that if you laid all the economists in the world end to end, they'd never reach a conclusion. But it seems that many have managed to do so this year. They report that New Zealand is in for a booming 2014, and, indeed, measures of confidence are growing around the country.
Last month, US business news channel CNBC picked New Zealand as the global "rock star" economy for 2014, with growth set to outpace most of its developed markets.
HSBC chief economist for Australasia Paul Bloxham predicted bullish growth based on the Canterbury rebuild, the country's housing boom, and rising dairy prices; as Fairfax columnist Michael Pascoe said recently, what iron ore and coking coal did for Australia, milk powder is doing for New Zealand.
Bloxham predicts the Kiwi economy will grow 3.4 per cent in 2014, the fastest pace since 2007, and draw even with the Australian dollar by the end of the year. Meanwhile, a PWC annual global CEO survey shows Kiwi chief executives are more upbeat about their business prospects in 2014 than their international counterparts, with 89 per cent feeling confident. Others say the New Zealand dollar is the "hottest" currency of 2014.
BNZ economist Tony Alexander is speaking in Nelson at a Chamber of Commerce function next month and he agrees with Bloxham, saying things are improving in our economy, with terms of trade - the ratio of export to import prices - at their highest level since 1973, Christchurch reconstruction set to stretch on for up to eight years, hefty investment in dairying and infrastructure, and strong jobs growth that has picked up "tremendously".
It will be, by all accounts, a very good year - and both Alexander and chamber chief executive Dot Kettle say Nelson and Tasman will reap the rewards.
Kettle cites a recent chamber survey of 80 members in late January that showed 79 per cent were feeling more confident about business for 2014, with just 4 per cent less confident. "[That's] a staggering vote of confidence in how they're seeing the year ahead," Kettle says.
The survey also found that although 40 per cent of businesses intended to hire more staff, none expected to let any go, which will surely come as a relief to workers, many of whom will have feared for their jobs since the global financial crisis.
"That's an indicator, I think, of some substance to what we're hearing at a national level in terms of growing business confidence, and that the New Zealand and our local economy look like they will perform very well this year," Kettle says. "We're feeling very confident."
In fact, unemployment in the top of the south has taken a dive in the past year. The Household Labour Force Survey, an official measure of employment, shows the unemployment rate for the Nelson, Tasman, Marlborough and West Coast region dropped from 5.8 per cent to 4.2 per cent in the year to December, which means 1400 more people have found jobs.
Nelson Regional Economic Development Agency chief executive Bill Findlater says he's been enthusiastic about our future for quite some time and prospects continue to look good.
"I think Nelson's on the cusp of something really good," he says, citing the research sector working together to find commercial benefits for their research and Nelson Marlborough Institute of Technology structuring courses to fit industry. The recession has strengthened the position of many that survived it. "It's all looking pretty strong."
He says primary industries, on which our region has a higher dependence than many, look promising as well.
Logs, fruit, fish and dairy had a good year last year, with solid returns in international markets. Findlater says some of the benefits of that are starting to be reflected in the wider regional economy.
"Our primary sectors have been holding their own for some time [and] now they're actually seeing the benefit of hanging in there. That'll be reflected in their returns, which then means they'll be able to spend more across the region that everybody will benefit from."
He predicts trends of people spending more will continue. "I don't think that's just a short-term thing. People are generally feeling positive about things."
Alexander echoes Kettle's and Findlater's optimism, saying most of Nelson's top five industries are going to do well this year, though he says horticulture "goes up and down like a yoyo" and has to be taken as it comes. He also expects housing to grow strongly, away from the crazy prices seen in Auckland and Christchurch and into other parts of the country. "I'd definitely expect Nelson to be benefitting from that," he says.
He pins that partly on young buyers looking for better value and investors looking for better yields, but also on the nation's greying population, as baby boomers, in particular those in Auckland, look to cash up and "retire somewhere better".
The region's mayors agree.
Nelson Mayor Rachel Reese says the economy is coming out of a fairly tough five years and her feeling is that there is a positive mood in Nelson. "Unemployment is lowest in the country and I know there are people out there that are underemployed, but I'm looking forward to a strong winter season leading up to a stronger tourism season. I think we're looking in good shape."
She says improvements in the construction sector - new projects coming in - are a good sign that the economy is picking up as confidence increases.
Tasman Mayor Richard Kempthorne says he's noted the increase in business confidence in New Zealand, and says it's clear that several economic sectors - horticulture, forestry, and dairy farming - have had a good year.
"There's probably a lot more positivity than there has been for a couple of years, so I think both New Zealand and local confidence is significantly strengthened," he says. He acknowledged that many were still facing "challenging times". "It's not just all one way. But I think we're in a good space for being a lot stronger than we have been for a few years."
Port Nelson chief executive Martin Byrne says that the year is off to a good start, particularly with the large offshore vessel Raroa moored in Nelson for repairs late last year. "We're cautiously optimistic, which I think is how everyone sees it at the moment," he says.
Nelson Pine Industries managing director Murray Sturgeon says 2013 finished ahead of plan. Although most people think the Christchurch rebuild will last for five years, he's predicting it will roll on for a good 35 before the CBD is back to a whole new normal.
Orders on MDF and LVL (laminated veneer lumber) were booked out until May, with heavy demand for LVL in Christchurch; the company is promoting wood as an attractive and earthquake-safe alternative to concrete and stone. The business is planning a full year working at capacity. There is high demand for logs in China, which is putting pressure on supply.
Wilson's Abel Tasman chief executive Darryl Wilson says the park is seeing a lift in visitor numbers and expenditure, though not yet at levels seen before the global financial crisis.
"We're very positive nevertheless. The mood of the nation seems good, and internationally also."
British and American travellers are returning, and growth markets include those from France and Israel. The latter were beginning to spend more.
"Predominantly we've had [Israeli] backpackers, and now we've got the backpackers' parents. They like New Zealand and they like our region, [and] word of mouth is still our strongest ally when it comes to spreading the word of the beauties of the Nelson region."
However, he says it's important to realise the value of regional marketing initiatives.
"These things don't just happen; there's been a lot of work behind the scenes changing this, and it's important we don't think it all comes from nowhere."
Sue Brown, the provincial president of Federated Farmers Golden Bay, says there are a lot of good signs, but "it's a cautious approach". "Farmers are relieved to have a good payout this year and the weather seems to be going well in most places, but the signs are [prices] will be lower next year."
Nelson, the largest fishing port in Australia and New Zealand, is home to the two largest fish processing companies in New Zealand. Sealord general manager Doug Paulin said he was feeling "very positive" about the seafood industry from a catching and sales perspective.
"Things are progressing very well. The strong dollar is a concern but we have pretty strong foreign exchange hedging programmes."
Paulin says fishing has been "very good", with pricing on the majority of the company's products strong. The lifts in prices had begun from about mid-last year, and demand was unrelenting, he said. On the aquaculture side, New Zealand Marine Farming Association executive officer Graeme Coates says there will be continuous growth in mussel farming of about 5 to 10 per cent in Golden Bay and Tasman Bay over the next 10 years, which should be "pretty positive" for the region.
The mussel industry exports to more than 40 countries, with its biggest market being frozen halfshells for the United States. More mussels mean more jobs, both on the vessels and on shore-based facilities and factories.
Back on land, apples are about to be harvested, but Pipfruit NZ chair Nadine Tunley says it's "massively crystal-ball gazing" to try to predict what the year will bring.
Prices moved substantially for the industry last year, which was positive, but she says New Zealand supplies just 0.2 per cent of the global supply of pipfruit. "We are massively insignificant in terms of volume."
Tony Alexander advises those in tourism in Nelson and Marlborough to check their dependence on Australian visitors for the coming years; Australians may shy away from visiting here, with their dollar no longer buying what it used to. However, he says improvements in the US and UK economies could mean more Brits and Americans coming our way.
As usual, however, there are warnings not to rely too much on economists. Nelson food producers have lately been hit by Australian supermarket restrictions, and others say that with the weakening economies of our two main trading partners, Australia and China, the country could see more modest growth.
Yet, Findlater says, Nelson is still a pretty good place to live. "I think we've got everything in this region that the rest of the world is going to want in the future."
- © Fairfax NZ News