Economic scorecard: Why are things so bad in Wellington?

ASB has actually launched its most current financial scorecard, which reveals Canterbury, Taranaki and Southland took the leading 3 areas in the 2nd quarter, improved by Fonterra’s capital return and strong export revenues.

Bay of Plenty fell the ranks, from very first in the previous quarter to 11th. Gisborne and Wellington were at the bottom of the table at 15th.

“Canterbury has the full package right now,” acting chief economic expert Kim Mundy stated. “High dairy prices boosted export returns, while continued population growth and major events supported by its new stadium helped support economic activity during the quarter.

“Families are investing, organizations are investing, the labour market stays resistant and strong dairy returns are supplying an extra increase to the economy.”

Retail sales in Canterbury were up 8.8 percent year-on-year, the strongest growth in the country.

“What’s fascinating about the retail information is that we can see there’s been a 4 percent year-on-year decrease in tourist costs in the area, recommending the strong retail sales in Q2 were driven by residents, instead of visitors,” Mundy said.

Canterbury’s labour market held up well, with employment up 2.6 percent year-on-year. Canterbury had some of the lowest unemployment in the country at 3.6 percent.

House prices rose 3.3 percent over the year and were almost back to their Covid peak.

Mundy said Taranaki had lifted from near the bottom of the table to second, thanks to dairy and meat sector performance, and Fonterra’s capital payout.

“We’ve got a two-speed economy at the minute with those rural sectors … doing better than the North Island metropolitan locations.”

Auckland was sixth. Mundy said its weak housing market was a drag on performance, and both sales and prices were down, compared to 2025.

While new-car registrations rose strongly, partly reflecting demand for electric vehicles, and building consents showed healthy growth, other regions recorded even stronger gains in these areas, she said.

“Population development and tourist are supplying some assistance to the area, however Auckland’s economy continues to compete with cost-of-living pressures, rates of interest trending greater, a soft labour market and continuous unpredictability. While these obstacles might weigh on activity in the near term, the area stays well placed to benefit, as financial conditions slowly enhance.”

Wellington fared worse. House prices were still down almost 30 percent from the peak and Mundy said demand for housing had also fallen significantly.

Wellington had experienced no population growth, a big drop in construction and a weak labour market.

Mundy said Wellington had underperformed since the government started to focus on reducing spending, although that had not been seen in job numbers.

“We just see aggregate tasks, however it hasn’t been as weak as you may have anticipated it to be,” she said. “The real estate market is a huge thing there.

“You’re not getting the population growth, so these do all feed into that broader malaise of the Wellington economy at the moment.”

She stated the two-speed economy was most likely to continue.

“We’re not expecting to see a sharp turnaround, particularly because we do still expect to see that ongoing support to the economy from the export sectors in particular, while when you look at domestic demand, there are a number of headwinds still facing that, so we think the recovery from a sort of domestic perspective is going to be more gradual.”

She stated it was a suggestion that the Official Cash Rate in specific was a blunt tool, when the Reserve Bank was making choices that might impact rather various economies.

“It is the tool that the Reserve Bank has to work with and I think, when we’re looking at inflation, inflation is something that everyone is feeling across the board, irrespective of how the economy is evolving in those regions.

“If you are an inflation-targeting reserve bank, it’s still going to serve its function there in regards to attempting to bring inflation back to the midpoint of the 1-4 percent inflation target.”