The recession is officially over, but how tough are things in the Western Bay? Business editor Graham Skellern takes a look at the local economy in the first of a series. Today, he examines economic activity in the Bay with a focus on the building trade, and speaks to businesses on Newton St to see how they are faring.
Economic activity in the Bay has taken a hit over the past six months and the blame has been placed squarely on the impact of the Psa kiwifruit disease and the grounded Rena container vessel.
New dwelling consents locally also continue to run at half the level they should be to inject life back into the building and property market, which is entering its fifth year of a downturn.
The latest National Bank and ASB/Main regional economic reports show that the Bay has dramatically fallen from being one of the best performing areas in the country to one of the worst.
The ASB/Main rankings put the Bay at the bottom, alongside Northland, Hawke's Bay and West Coast for the three months ending December.
Among the 16 regions, the Bay has fallen from a lofty second place in the June quarter to middle of the rankings for the September quarter.
For the December quarter, employment in the Bay fell 3 per cent to 118,000 (out of a population of 277,000), retail trade was up 9 per cent to $911 million, house prices slipped 0.6 per cent to $348,000, the value of construction decreased 26 per cent to $113 million, and new car sales were steady at 1649.
The ASB/Main report said the slide likely reflected the effects of the Psa outbreak on the kiwifruit producing region, and the fall-out from the Rena shipwreck on its tourism industry.
Employment and housing market activity declined over the past year in contrast to the recovery generally taking place nationwide.
These developments look to be weighing on the region's household sector, and consumer confidence in the Bay now lags most other regions in New Zealand, the report said.
National Bank's regional trends survey showed the Bay's economic activity slipped 1.9 per cent during the December quarter, placing it second-to-last of 14 regions and just ahead of West Coast, which fell 2.3 per cent.
The Bay's year-on-year growth was zero, along with Waikato, making them seventh equal.
But the Western Bay of Plenty economic monitor, commissioned by Priority One, said the growth rate for the year ending November was 2.1 per cent taking into account retail sales, building consents, car registrations and residential property sales.
The economic monitor estimated retail sales reached $447.8 million in the Bay during December - the highest recorded over the past two years. The annual average growth rate was 4 per cent.
The number of car registrations in the Western Bay fell from 536 in November to 471.
According to Tauranga City Council figures, the number of new dwelling permits issued last year reached 545 compared with 492 in 2010 - well below the peak years between 2003 and 2006.
A total of 1443 permits were issued 2003, 1597 in 2004, 1267 in 2005, and 1146 in 2006.
In January 47 permits were issued, up six from the same month last year.
Mohan De Mel, the council's treasurer, said: "We are still getting 40-45 permits a month and we need to do better ... 70-80 a month. At least last year was better than 2010."
He said one good sign was the increased activity in the commercial property sector, with new buildings going up in Cameron Rd and Devonport Rd. Ryman Healthcare's Bob Owens Retirement Village was pushing ahead, and the hospital was always doing some work.
Tauranga's two biggest group builders are expecting to build more new houses this year, but they are being cautious.
David Mansel, a director of Generation Homes, said there was a definite lift last month.
"We were still quiet up to the end of last year and then we had a big increase in inquiry from people who are cashed up.
"The real estate scene has been busy, rental agencies are short of properties, interest rates are low and first-time home buyers can pull their KiwiSaver money for a new house.
"The inquiry will definitely flow into sales but they haven't hit the building consents yet," Mr Mansel said.
He said building and property was the biggest industry in the region - "but you've got to give the port and related businesses kudos" - and everything looked rosy this time last year.
"Then it turned to custard ... the Christchurch earthquake, Japanese tsunami, Rena on the rocks, Psa looking bad. I think the Rena wreck has now gone out of the news. It's more positive and people are starting to move forward," said Mr Mansel.
He has set a conservative budget of building 36 new houses in Tauranga this year, compared with 30 last year. Generation Homes used to do 80 homes a year here in better markets.
Classic Builders got through 61 new houses in the Western Bay region last year (its peak was 115), and its owner Peter Cooney said Tauranga was still looking pretty sick. "The land is too dear and the demand is not there."
He said Tauranga was still a desirable place to live but not many jobs were advertised, and other places were more affordable.
"When Auckland grew, we grew ... That was the case in the 1980-90s but the Aucklanders can now spread to Orewa, Matakana, Omaha and even Matamata."
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Newton St has long been the heartbeat of the Mount Maunganui, and even Tauranga, industrial and commercial scene.
It has an eclectic mix of businesses involved with retail, wholesale, manufacturing and exporting. Two gyms and a childcare centre join the lineup.
Above all, Newton St has been known as the destination for home builders and renovators. They can drive or walk up and down the street and in one fell swoop stock up on their new kitchen, bathroom, laundry, lighting, carpet, vinyl, tiles, paint, cupboards and some furniture.
Newton St, the only thoroughfare through the Mount industrial area from Hewletts Rd to Hull Rd, developed its own vibrancy with hard-working and dedicated family businesses operating alongside the slicker national chains. But has this lustre been lost?
These businesses, dealing with the public and different trades, are related to the building industry which, in Tauranga, has been one of the most affected sectors since the onset of the recession in late 2007.