Economic report: Auckland region hit hardest by Covid

Wharariki Beach, in Golden Bay. Photo Supplied/ Cape Farewell Horse Treks

The Auckland region took the biggest economic hit during the third quarter of the year, thanks largely to the second lockdown, but other urban areas including Wellington were also underperforming, according to research by Infometrics.

Broadly, the New Zealand economy rebounded strongly in the September quarter, with regional economies showing renewed strength, getting back on their feet, the latest Infometrics Quarterly Economic Monitor found.

"The economic hit from Covid-19 is being felt differently across the country, with a considerable number of New Zealand's regional areas recording a strong bounce in economic activity in the September 2020 quarter," Infometrics senior economist Brad Olsen said.

"But it is those urban metro centres that seem to have taken a harder hit."

Part of that was down to trends such as working from home, he said.

"That is a huge change and we saw that with the Auckland lockdown - spending was down. But we did also see that the likes of Wellington, the public service in particular, did start to work from home. And that sucked all the life out of some urban centres."

Auckland, Wellington, Otago and Canterbury were the four worst-performing regions, according to Infometrics, which looked at a range of recent data including retail spending, employment, vehicle registrations and traffic data.

The other interesting trend was how the effect on tourism was starting to show through, Olsen said. The best performing regions were Tasman, Northland, Hawke's Bay, Gisborne and Nelson.

Three things were driving those regions, said Olsen. First, he said, a number of areas that weren't as exposed to international tourism have been able to rebound stronger.

Then there was the primary sector, with good export demand, and pricing, which is holding economic activity at solid levels.

"The challenge there is that we're not expecting the export sector to hold up throughout," Olsen added. "It is going to soften but not as badly as other sectors."

Thirdly, these areas were also a very attractive proposition in terms of where people were moving post-Covid.

"We are seeing people opting to think about where they want to live. And those areas have some really good lifestyle options," Olsen said.

"That speaks to a wider point that we did see across the economy, that people really did get on to that 'buy local' bandwagon. [People] came out and said 'we've saved some money during lockdown' let's get that back into the local community."

That had really showed in Northland spending numbers, for example, he said.

One point of caution was that the numbers recently had started to soften.

"That is as we expected and it does highlight that summer is going to be a very tough period, with tourism hit probably three times as bad as we've seen in recent months."

- Due to a data processing error, Infometrics has corrected the economic activity changes for Auckland and Wellington Regions. This story and graphic has been updated accordingly.