5.2 National Bank estimates of regional economic performance
The National Bank of New Zealand produces quarterly reports on regional economic trends.[31] These are based on the Bank’s index of regional economic activity. This is constructed from a mixture of official Statistics New Zealand data and other available regional data together with modelled components to fill in some gaps.[32] The result is a proxy for overall economic activity in each region rather than a true national-accounts type measure of regional GDP.
Each quarter the Bank reports the growth in this index for each region compared to the previous quarter and also the year-on-year growth rate. It also gives regional summaries of the most significant and interesting movements in the individual series that make up the overall activity index. The reports do not present estimates of GDP per capita or labour productivity growth rates or levels, as the data and the approach make it difficult to derive such measures[33].
Figure 8 shows the average growth performance of New Zealand’s 14 regions as measured by the National Bank’s regional activity index. From 1997 to 2004, Auckland’s annual average growth rate of 2.7 per cent was fourth slowest and below the rate for New Zealand as a whole. If anything, the picture from the National Bank’s measure shows Auckland performing even less well relative to the other regions than what is found in the NZIER study.
The reasons for the different findings between our results and the National Bank’s index of regional activity are likely to be similar to those that account for the different results between our research and the NZIER study. First, the National Bank’s index is an aggregate measure rather than either a per-person or a per-worker (i.e. productivity) measure. Thus, a region could have slow growth in overall activity because of slow population growth, even though growth in activity per capita might be strong. Alternatively, and more likely in the case of Auckland, high growth in activity per worker (ie productivity) could be offset by low growth in the population of working age or in labour force participation, giving modest rises in overall activity or even in per capita activity. In fact, the unadjusted figures in Table 1 for the growth of real annual labour income (a volume measure that reflects employment rates) shows Auckland in the middle of the pack and is not inconsistent with the National Bank growth rate estimates over the same period. Finally, the different geographical comparison areas in the two studies are also likely to influence the difference in results[34].
Notes
- [31]The two most recent reports are available at http://www.nationalbank.co.nz/economics/regional/default.htm
- [32]Examples of official SNZ series available on a regional basis are retail sales, employment and population. An example of a non-SNZ series available on a regional basis is the quarterly survey of business opinion undertaken by the National Bank. Other examples of regional data that the National Bank uses are new car registrations, job ads, dwelling approvals, commercial building consents and accommodation guest nights.
- [33]The National Bank (2004) has nevertheless published a graphical time series of real activity per capita for Auckland, Waikato, Taranaki and Southland from 1974:1 to 2004:3 based on its index of regional economic activity. This shows the three ‘dairy’ regions outgrowing Auckland since around 1996.
- [34]But see footnote 29.
