The recovery feels elusive to many, but some parts of New Zealand are booming. Shamubeel Eaqub pulls together 15 indicators for every district in the country to find out who is doing well, and why.

New Zealand’s economy, viewed as a whole, remains in a funk. A hoped-for recovery at the beginning of the year got trumped by Trump when he launched a war on Iran. Higher oil prices hit incomes. Fearful households and businesses pressed pause on spending, investment and job decisions. 

Despite a gradual improvement in some indicators over the past year, there is still a lot of pain out there. Cost of living is squeezing household budgets and unemployment is at its highest in over a decade.

That is the story of New Zealand on average. But we don’t live on the average. Some sectors and occupations are doing better or worse; the same applies to parts of the country viewed from a geographic perspective. That is the focus here. 

I’ve pulled together 15 indicators for regions and districts (excluding the Chathams – sorry, the data is very patchy), spanning jobs, pay, housing, people, building and business, to let the data do the talking. You can play it yourself in the explorer below. 

The big picture, as I see it, is a north-south divide, with mainly good news in the provinces. The weakest spots are south Waikato (mill closure), Wellington (government pullback) and Northland (closures and the curse of its relative economic isolation).

The south is booming

Canterbury, Otago and Southland are leading the charge. West Coast is riding a wave of growth on the back of farming and mining. Northland and Wellington are really hurting. Auckland is stalled. 

The same shows up in our national obsession – house prices – which are down from the Covid-era super-highs in most places, but have increased sharply in Southland over the past year. 

This divergence of current economic fortunes isn’t about being a lucky town, it’s very much a function of good growing conditions, record commodity prices, and a resurgence in mining activity in some places.

The fastest-growing districts are big on farming. The heartland has some major swagger right now and the fastest-growing are: Hurunui, where a third of the jobs are in farming, forestry, fishing and mining; Southland District, where it is 36%; Central Otago, 31%.

High prices for beef and lamb, dairy and the extra cash from Fonterra’s brand sale, and even good wool prices (which hasn’t happened for decades) are all helping.

But not every farming community is benefiting. So, even here it is not a rising tide lifting all, but some farms were better prepared to benefit.

Urban economies are different

When I look across 25 years of economic data, it’s pretty clear that urban and rural economies don’t share the same drivers. Many, of course, are similar, but construction, retail, hospitality and manufacturing are the big drivers of urban places. Rural parts of the country are heavy on the primary sector, and sometimes on one or two big industries. That can give them insulation from the economic cycle, but they are also exposed when a major employer goes – like manufacturing plant closures in Tokoroa and Hawke’s Bay, or when commodity prices fall, or drought takes grip. 

Farmers are always watching the weather. Predictions for a strong El Niño could mean drier than usual conditions. It’s not a 100% predictor – but a risk nonetheless.

The current economic weakness is very much an urban and North Island story. It affects around 3.6 million people, or two-thirds of Kiwis. So, the provincial good news is indeed good, but its reach is small.

Watch demography

Across provincial New Zealand, many of the places currently enjoying good economic conditions also face big demographic pressures. While Canterbury’s population is growing at 1.1%, Marlborough and Nelson are shrinking. Many of these strong-cycle districts have little or no natural population growth, so any growth has to be imported – either from overseas or from other parts of New Zealand.

Without population growth, many of these smaller provinces cannot afford long-deferred infrastructure bills (especially water), or to even upkeep their current infrastructure.

If you have a job there, life can be good

I hope the flush of good news gives a nudge for people to move to some of these places. The biggest export of our provinces is young people. Yet, there are jobs in these places. I see this paradox in many places: unemployed looking for work and businesses looking for workers, but not matching because they don’t have the right skills or some other barrier. 

Provincial wages can seem lower at first blush, but are often better after housing costs.

When we look at one boiled-down measure – average pay of one filled job in each district, and subtract housing costs (a year of rent or the cost of owning the median house) – the picture is striking.

Viewed nationally, the average person’s annual pay sits at about $49,600 after rent, or about $29,500 after servicing a median house that is owned. This is only a rough illustration: the best comparison would be household income net of taxes and transfers – but that is quite tricky at a district level. 

The top of the after-ownership list is surprising: Kawerau, Buller and Ruapehu, at roughly $43,000 to $46,000 a year left over. Cheap houses can beat high pay. Real pay is growing fastest in Clutha, Gore and Mackenzie District. In Ruapehu, Buller, Kawerau and Clutha owning is cheap relative to renting – the opposite of what we see in the big cities.

At the other end of the scale is Queenstown-Lakes, which is growing insanely fast and is insanely unaffordable for the average worker. Servicing the median house there costs about $30,000 a year more than the average local job pays. The workers aren’t the owners there – it’s a two-speed economy where homes are for the very well off and hostile to the very workers who make the place function.

Wellington is the mirror image

The capital can boast the highest after-rent incomes in the country – about $68,800 for one job in Wellington City. It is also the region that experienced the biggest fall in business locations over the past year, while real pay fell and job ads are stuck at two-thirds of their 2019 level.

This is an expensive place doing badly, and still paying well. If the provinces are having a good cycle from a hard structural position, Wellington is having a bad cycle from a strong one.

One number to rule them all

This is a large load of data. It can be hard to make sense of it all. So I created a composite measure to look at the cyclical position, the structural position, and the average of the two.*

By District, Selwyn comes out top, then Queenstown-Lakes, Southland District, Mackenzie and Hurunui – the heartland is leading the pack. At the bottom: Buller, South Waikato, Far North and Whakatāne.

By region, Canterbury and Otago lead; Nelson and Marlborough sit last.

It’s just the data speaking on these measures; there will be other things happening in these places. I am just adding this caveat because I don’t want anywhere to run me out of town like they did in Whanganui. (I deserved it, after calling the river city a zombie town in 2014, after which – I assume to spite me – it started to grow strongly after decades of stagnation.)

Adding back a bit of complexity

But that one number flattens these different dimensions. The cyclical and structural positions both matter. One tells us how things are right now, and the other what we should be planning for.

Broadly there are four camps.

Eighteen districts are strong on both counts (cyclical and structural), including Selwyn, Hurunui, Mackenzie, Southland District and Queenstown-Lakes.

Twelve are riding the cycle from a weak structural base, including Kaipara, Waitaki, Gore, Kawerau, Ruapehu and Dunedin.

Fourteen are structurally strong but cyclically soft: Wellington City, Auckland, the Hutt cities, Porirua, Palmerston North, and Clutha.

Twenty-two districts are weak on both, including the Far North, Gisborne, Rotorua and Whangārei — and, more surprisingly to me, Tauranga, Napier and Nelson.

Regional data in New Zealand is of mixed quality. Sometimes I have used benefit data, which is affected by policy decisions, not just what’s happening in the economy. So, use this analysis as a way to think about places, with caveats on data quality.

The signal is pretty strong. There is an economic recovery and it’s mainly rural and mainly in the south. Good growing conditions and good prices are both helping. Cheap housing means many of these places are more affordable and good places to live. Many of those places hope their current good fortunes and affordable houses will encourage people to move there – they need those people to manage the twin pressures of an ageing population and looming infrastructure renewals.

* For each place I took the 15 indicators and split them into two groups: how things are moving right now (jobs growth, unemployment change, house sales, migration, real pay growth, business openings) and where the place stands structurally (unemployment level, income after housing costs, births vs deaths, building rates). Each indicator is converted to a standard score — how far above or below the average district that place sits. Extreme outliers are capped so one freak number can’t dominate, and the scores are averaged with equal weight. The cyclical and structural averages give the two sub-scores; the overall number is just the mean of the two. Zero means an average district; it’s a summary of where the data sits today, not a forecast. It’s the OECD’s standard method for building composite indicators, and the rankings barely move if you drop any single indicator.