Finance, insurance on rise in Auckland

The finance and insurance industries will anchor Auckland's growth prospects in the coming year, the Business & Economy report notes.

But the prospects for other key sectors such as construction, retail, tourism, are muted.

Demand for finance, insurance and business services would be underpinned by the region's expected population growth.

New dwelling consent figures suggest construction activity would ease through 2005. However, a softening housing market is expected to free up resources for infrastructure.

Retail sales should remain solid as the tight labour market continued to support household incomes.

"Demand is being buoyed by retailers passing on the benefit of the high exchange rate to prices, although this will place pressure on margins if the currency retreats quickly," the report said.

As the housing sector eases , spending on items such as appliances, hardware, furniture and motor vehicles will moderate.

The tourism sector was facing a "mixed bag". The exchange rate was discouraging the longer-staying, higher-spending US, Japanese and European markets. But discounts on transtasman fares were encouraging higher-volume but shorter-stay visitors. The Lions tour would provide a modest boost to the economy.

Manufacturers were also suffering from the strong dollar

"Growth to date is being supported by the continued strength of the national economy, and robust international demand. However, as the economy slows, demand for investment goods will moderate."