Auckland to lead NZ jobs growth over next four years as Christchurch falls below national average, Infometrics says

Auckland is set to lead New Zealand jobs growth over the next four years, while New Zealand’s second city, Christchurch, will slip below the national average as economic growth struggles to stay at rates experienced during the post-earthquake boom, according to economic forecaster Infometrics.

Infometrics on Wednesday released its latest Regional Perspectives report, with forecasts for employment growth and key industries out to 2021.

Auckland will outperform the national economy during the four years, with 85,000 new jobs expected to be created over that timeframe, Infometrics chief forecaster Gareth Kiernan said. The region represents 38% of the New Zealand economy and 35% of nationwide employment (824,200 jobs).

Job creation in the city will be strongest in professional, scientific and technical services (16,450 new jobs), health care and social assistance (11,050 new jobs), and education and training (8,200 new jobs), Infometrics forecast.

But growth will not be limited to the high-end service part of the Auckland economy. “The construction industries will experience substantial job growth as the prolonged response to Auckland’s housing supply issues continues throughout the next four years,” Kiernan said.

“Residential construction activity will be accompanied by the need for ongoing investment in infrastructure in the region as well.” A combination of population growth and further increases in tourist numbers will benefit the retail, accommodation and food services industries, he said.

Northland, Waikato, Bay of Plenty, Nelson, Tasman, Marlborough, and Otago are also expected to exceed 2.0% per annum jobs growth over the next couple of years, Infometrics forecast.

Christchurch construction jobs to drop 10% over next year

In contrast, Christchurch City is facing a slowing growth rate, Kiernan said. Christchurch City represents 8.5% of the New Zealand economy and 9.5% of nationwide employment (224,300 jobs).

“At 0.9% per annum over the next four years, we are forecasting employment growth in Christchurch to lag behind nationwide growth of 1.7%. The toughest period is likely over the next 12 months as construction employment declines by over 10%,” Kiernan said.

Economic activity in Christchurch grew by an average of 4.7% pa between March 2012 and March 2015 as the city recovered from the devastating earthquakes of 2010 and 2011. This growth rate was a full two percentage points faster than nationwide growth.

“But with residential building activity having peaked in 2015, and signs that both non-residential and infrastructure construction are also tapering, economic growth in Christchurch has slipped back below the national average. This struggle to keep up with the performance of the broader New Zealand economy will continue throughout the next four years,” Kiernan said.

The post-rebuild slowdown will be felt most acutely in the construction industries, he said. “Between 2017 and 2021, we are forecasting the loss of 4,200 jobs, or 15% of the workforce, across the building construction, heavy and civil engineering construction, and construction services industries.”

Other parts of the Christchurch economy that are likely to come under pressure include motor vehicle retailing and manufacturing. “Manufacturing activity in Christchurch has been under sustained pressure from the weak Australian dollar and soft economy across the Tasman,” Kiernan said.

“Demand from Australia is a significant driver of manufacturing activity in Christchurch, and although both Australia’s economic performance and the exchange rate are likely to become more favourable for exporters over the 2-3 years, the city’s manufacturing sector is unlikely to grow rapidly.”

There were bright spots for the city. “Strong performances by professional, scientific and technical services (2,850 more jobs over the next four years), health care and social assistance (2,950 more jobs), and education and training (1,650 more jobs) will be big contributors to new job growth,” Kiernan said.

The grey wave

Meanwhile, ageing baby boomers should boost nationwide demand for healthcare jobs in coming years, Kiernan said.

“Of the 30,900 additional jobs created in the health care and social assistance industry over the next four years, we expect just over half to be in Auckland (9,900 jobs), Wellington City (2,000 jobs), and Christchurch (3,300 jobs),” he said.

“Outside the three largest cities, Hamilton (2,000 jobs), Tauranga (1,300 jobs), and Dunedin (1,000 jobs) will also record significant increases.

“Provincial centres, such as Whangarei, Wanganui, Palmerston North, and Masterton, with hospitals offering mid-level medical care to a catchment that extends well beyond the town in question, will also benefit from the industry’s growth.”

“The grey wave of aging baby boomers represent not only a political bargaining chip, but caring for these people will be one of the key sources of employment growth in provincial centres over the coming years.”