Construction drives lift in Cantometer
A bustling construction sector is driving Canterbury's recovery from the earthquakes, with building costs rising sharply, up nearly 10 per cent from a year ago, according to a new index tracking the recovery.
However, other parts of the region's economic backbone, including employment, consumer confidence and guest stays, have not bounced back as strongly, according to the ASB Cantometer index of activity.
The Cantometer, developed by the bank, shows the region's aggregate activity levels have now lifted above pre-earthquake levels with the construction sector dragging the total up.
Following the 2010 and 2011 earthquakes, activity in Canterbury fell sharply, ASB's analysis shows.
The index measure is based on five categories - construction, housing, employment, retail spending, and a population-based "miscellaneous" sub-category.
ASB chief economist Nick Tuffley said the Cantometer showed a recovery in the last year with the November snapshot jumping to 0.1, showing "aggregate" activity was now above pre-earthquake levels.
Zero in the index represents where Canterbury activity was in June 2010, the last full quarter prior to the first earthquake.
Tuffley said the Cantometer was a reference tool to get a taste of activity and the rebuild in Canterbury, rather than a reflection of economic growth.
Although four of the aggregate Cantometer index's five sub-categories remained negative, they should trend upwards in coming months.
"I think we will expect to see pretty much all those broad indices gradually trending up over time."
The retail spending category index was negative at -0.8, but within that sub-category the retail trade indicator was positive at 0.6, Tuffley noted, with the index dragged down by negative consumer confidence.
Construction was the big driver of the lift in the Cantometer, with the construction index at 2.2, he said.
"There's still a long way for that level of construction activity to pick up over the next while." But the fact that sub-index was more than 2.0 standard deviations away from normal was "very strong".
Strong lifts in building consents and demand for ready-mix concrete led this index increase. The impact of the rebuild would widen with people pulled in to the region to get the work done.
In the two years since June 2010 the population in Christchurch city had declined by 13,500, or 3.6 per cent.
With some of those moving within the province the population in the Canterbury region has declined by 6900 or 1.2 per cent.
Encouragingly, net external migration into Canterbury had turned to a consistent net positive inward flow in recent months, while around the rest of the country it was "still a slight negative outflow", Tuffley said.
"So Canterbury is actually disproportionately attracting or retaining people."
Canterbury wage growth had also been stronger than in the rest of the country. ASB expected Canterbury reconstruction activity to underpin the nationwide lift in residential construction over the coming year, with nationwide activity expected to rise 18 per cent over the year to June 2013. This would be the highest residential housing growth since mid-2003, Tuffley said.