1. Napier City Economic and Tourism Update 25 November 2010

2. Purpose – to indicate:  Economic and tourism trends in the City over the past four years or so  The current economic and tourism situation in Napier  The economic and tourism outlook for the coming year  Some of the economic challenges ahead for the City

3. Subject Coverage  Demographic (population and households)  Economic growth  Industry growth  Business confidence  Employment  Income  Tourism  City developments

4. Population Change Since 2006 Year  Total population gain of 800 or 1.4% since 2006,compared to 4.4% nationally. Present population 57,600  Population growth driven by natural population gain and net internal migration gain (from other parts of NZ)  Further population growth projected

5. New Residential Construction  Overall fall since 2006 but 50% gain over the latest September year  Since June 2006, total additional housing in Napier of 1,106 or 4.8%  Projected growth to around 25,000 during next five years, from currently 24,188

6. Local Economic Indicators Indicator % Change (Sept Years) 2007-20092009-2010 # New Dwellings Consents-56.1+49.7 # New Commercial/Industrial Buildings Consents -56.3+14.3 # Other New Building Consents+42.9+10.0 # Total Building Alterations-22.4-1.8 # House Sales-41.6+11.5 Retail Sales ($)+3.1+4.9 # New Vehicle Registrations-43.7+18.2  Large falls over 2007-2009 for most indicators; gains for new building consents for other than residential and commercial/industrial building  Significant gains from a low base for most economic indicators over the past year

7. Total Economic Growth  Some positive growth over the latest June year, following the sharp decline over the 2008/09 year  Historically, growth has fluctuated in the City quite noticeably  National economic growth over the past year of 0.6%, compared to Napier 0.9% and Hawke’s Bay -1.3%

8. Employment June Qtr Employment (1) Unemployment (2) Annual Labourforce (1+2) Rate of Unemployment (%) Labourforce Participation Rate (%) 2006 26,8661,23728,1034.461.8 2007 27,7471,36829,1154.764.0 2008 27,8581,28229,1404.463.9 2009 27,1002,04029,1407.063.7 2010 27,0642,54729,6118.664.3  Approx 3% fall in employment since 2008  More than doubling of unemployment numbers since 2008  September unemployment rate of 6.2%, New Zealand 6.2% and Hawke’s Bay region 7%  Labourforce participation rate stable last 4 years

9. Latest Industry Profile  Largest employing industries are retailing, manufacturing/processing, education and training, healthcare and social assistance, and visitor accommodation/food services

10. Latest Industry Profile [cont’d]  Largest employment gains last decade have been, in order, public utility services, administrative and support services, arts and recreation services, construction and professional/scientific/technical services.  Employment decline for manufacturing (tobacco, textiles, chemicals, transport equipment), wholesaling, postal services and hospital services.  Last three years – most employment gains for utility services, finance and insurance services, administration and support services (especially labour supply services). Largest employment falls for construction activity and services, public administration/defence, rental/hiring services, food/beverage services and wholesaling.  Average business employment size is 4 staff – primary production (4), manufacturing (7), construction (3) and services (4)

11. 1.Supermarkets (1,080) 2.Employment Support Services (990) 3.Cafes/Restaurants (800) 4.High School Education (600) 5.Visitor Accommodation (570) 6.Primary Education (550) 7.Aged Care Services (530) 8.Tertiary Education (460) 9.Social Assistance (450) 10.Central Govt Admin (410) 11.Local Govt (390) 12.Road Freight Services (370) 13.Pre-School Education (360) 14.Road Construction (330) 15.Cleaning Services (310) 16.Management Advisory Services (310) 17.Medical GP Services (300) 18.Takeaway Food (290) 19.Pipfruit Growing (280) 20.Clothing Retailing (280) Top 20 Industry Employers

12. Business Confidence

13. Main Current Business Influences PositiveNegative Market improvement International downturn Stable customer base Low consumer confidence Increased efficiencies Reduced consumer spending More strategic approach Building industry slowdown Increased Govt work More competition Increased external work Reduced tourism Increased marketing Seasonal low point

14. Port International Trade Tonnages  Exports account for 83% of total tonnages  Export tonnages increase of approx 20% since 2008  Import tonnages fell 38% last year but have recovered 83% during the latest year  Cruise ship visits this season – 50 visits with a combined visitor impact of some 103,200

15. Tourism Sector  Slight increase in commercial plus private household visitor numbers over latest year, following gradual fall during previous 4 years  i-Site visitor numbers have fallen fairly steadily since 2007  Total visitor nights have fallen overall, over the period  Average length of stay has fallen since 2008

16. Positive City Ec. Developments  Further Council roading/ cycleway infrastructural work  Completion of Taradale business area upgrading  Start to the new Museum development  Further housing development at Parklands and Te Awa Estate  EIT Hawke’s Bay – proposed merger with Tairawhiti Polytechnic in Gisborne will allow EIT to grow further; increased Youth Guarantee Scheme student places next year; increased research activity  Inner City business changes including the Farmers retail proposal  Ongoing Ahuriri residential/retail/office developments  Power supply initiatives (Unison dividend payment, smart meters)  Hawke’s Bay Airport projects (runway extension and Skyline Aviation)

17. Latest Benefit Numbers BenefitSeptember 2008September 2010% Change Unemployment268 (6%)951 (17%)+254.9 Domestic Purposes1,763 (39%)2,052 (36%)+16.4 Sickness875 (19%)998 (18%)+14.1 Invalids1,327 (30%)1,372 (24%)+3.4 Other265 (6%)279 (5%)+5.3 TOTAL4,4985,652+25.7  Numbers in brackets are %s of the total  Significant increase in unemployment benefit numbers and share of total benefits  Fall in Domestic Purposes and Invalids Benefit % shares

18. Outlook for Coming Year  A positive-coming up to the ‘busy season’ here in HB  Napier businesses still positive overall about improved economic and business conditions during the next year  Improvement is likely to be fairly ‘low and slow’  Labour-market good for some (eg qualified and experienced staff) but difficult for others (entry level)  Things still difficult for a number of households

19. Economic Challenges  Continued recovery from the economic downturn  Population growth  Tourism sector growth  Business sector support  More employment opportunity  Production/manufacturing/exporting  Further education and training  Infrastructural developments

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