Napier City Economic and Tourism Update

25 November 2010

Purpose – to indicate:

Economic and tourism trends in the City over the past four years or so

The current economic and tourism situation in Napier

The economic and tourism outlook for the coming year

Some of the economic challenges ahead for the City

Subject Coverage

Demographic (population and households) Economic growth Industry growth Business confidence Employment Income Tourism City developments

Population Change Since 2006 Year

Total population gain of 800 or 1.4% since 2006,compared to 4.4% nationally. Present population 57,600

Population growth driven by natural population gain and net internal migration gain (from other parts of NZ)

Further population growth projected

New Residential Construction

Overall fall since 2006 but 50% gain over the latest September year Since June 2006, total additional housing in Napier of 1,106 or 4.8% Projected growth to around 25,000 during next

five years, from currently 24,188

Local Economic Indicators

Indicator% Change (Sept Years)

2007-2009 2009-2010

# New Dwellings Consents -56.1 +49.7

# New Commercial/Industrial Buildings Consents -56.3 +14.3

# Other New Building Consents +42.9 +10.0

# Total Building Alterations -22.4 -1.8

# House Sales -41.6 +11.5

Retail Sales ($) +3.1 +4.9

# New Vehicle Registrations -43.7 +18.2

Large falls over 2007-2009 for most indicators; gains for new building consents for other than residential and commercial/industrial building

Significant gains from a low base for most economic indicatorsover the past year

Total Economic Growth

Some positive growth over the latest June year, following the sharp decline over the 2008/09 year

Historically, growth has fluctuated in the City quite noticeably National economic growth over the past year of 0.6%,

compared to Napier 0.9% and Hawke’s Bay -1.3%

Employment

June QtrEmployment

(1)Unemployment

(2)

Annual Labourforce

(1+2)

Rate of Unemployment

(%)

Labourforce Participation

Rate (%)

2006 26,866 1,237 28,103 4.4 61.8

2007 27,747 1,368 29,115 4.7 64.0

2008 27,858 1,282 29,140 4.4 63.9

2009 27,100 2,040 29,140 7.0 63.7

2010 27,064 2,547 29,611 8.6 64.3

Approx 3% fall in employment since 2008 More than doubling of unemployment numbers since 2008 September unemployment rate of 6.2%, New Zealand 6.2% and

Hawke’s Bay region 7% Labourforce participation rate stable last 4 years

Latest Industry Profile

Largest employing industries are retailing, manufacturing/processing, education and training, healthcare and social assistance, and visitor accommodation/food services

Latest Industry Profile [cont’d] Largest employment gains last decade have been, in order, public

utility services, administrative and support services, arts and recreation services, construction and professional/scientific/technical services.

Employment decline for manufacturing (tobacco, textiles, chemicals, transport equipment), wholesaling, postal services and hospital services.

Last three years – most employment gains for utility services, finance and insurance services, administration and support services (especially labour supply services). Largest employment falls for construction activity and services, public administration/defence, rental/hiring services, food/beverage services and wholesaling.

Average business employment size is 4 staff – primary production (4), manufacturing (7), construction (3) and services (4)

1. Supermarkets (1,080)2. Employment Support

Services (990)3. Cafes/Restaurants (800)4. High School Education

(600)5. Visitor Accommodation

(570)6. Primary Education (550)7. Aged Care Services (530)8. Tertiary Education (460)9. Social Assistance (450)10. Central Govt Admin (410)

11. Local Govt (390)12. Road Freight Services

(370)13. Pre-School Education

(360)14. Road Construction (330)15. Cleaning Services (310)16. Management Advisory

Services (310)17. Medical GP Services (300)18. Takeaway Food (290)19. Pipfruit Growing (280)20. Clothing Retailing (280)

Top 20 Industry Employers

Business Confidence

Main Current Business Influences

Positive Negative

• Market improvement • International downturn• Stable customer base • Low consumer confidence• Increased efficiencies • Reduced consumer spending• More strategic approach • Building industry slowdown• Increased Govt work • More competition• Increased external work • Reduced tourism• Increased marketing • Seasonal low point

Port International Trade Tonnages

Exports account for 83% of total tonnages Export tonnages increase of approx 20% since 2008 Import tonnages fell 38% last year but have recovered 83% during

the latest year Cruise ship visits this season – 50 visits with a

combined visitor impact of some 103,200

Tourism Sector

Slight increase in commercial plus private household visitor numbers over latest year, following gradual fall during previous 4 years

i-Site visitor numbers have fallen fairly steadily since 2007 Total visitor nights have fallen overall, over the period Average length of stay has fallen since 2008

Positive City Ec. Developments Further Council roading/ cycleway infrastructural work Completion of Taradale business area upgrading Start to the new Museum development Further housing development at Parklands and Te Awa Estate EIT Hawke’s Bay – proposed merger with Tairawhiti Polytechnic in

Gisborne will allow EIT to grow further; increased Youth Guarantee Scheme student places next year; increased research activity

Inner City business changes including the Farmers retail proposal Ongoing Ahuriri residential/retail/office developments Power supply initiatives (Unison dividend payment, smart meters) Hawke’s Bay Airport projects (runway extension and Skyline Aviation)

Latest Benefit NumbersBenefit September 2008 September 2010 % Change

Unemployment 268 (6%) 951 (17%) +254.9

Domestic Purposes 1,763 (39%) 2,052 (36%) +16.4

Sickness 875 (19%) 998 (18%) +14.1

Invalids 1,327 (30%) 1,372 (24%) +3.4

Other 265 (6%) 279 (5%) +5.3

TOTAL 4,498 5,652 +25.7

Numbers in brackets are %s of the total Significant increase in unemployment benefit numbers and share of

total benefits Fall in Domestic Purposes and Invalids Benefit % shares

Outlook for Coming Year A positive-coming up to the ‘busy season’ here in

HB Napier businesses still positive overall about

improved economic and business conditions during the next year

Improvement is likely to be fairly ‘low and slow’ Labour-market good for some (eg qualified and

experienced staff) but difficult for others (entry level)

Things still difficult for a number of households

Economic Challenges Continued recovery from the economic downturn Population growth Tourism sector growth Business sector support More employment opportunity Production/manufacturing/exporting Further education and training Infrastructural developments

For further information ..