Encouraging signs for Canterbury's economy in 2025

In looking for a metaphor to open this column, I couldn’t pass up Kea Aerospace’s milestone this month of sending a solar-powered flight into the stratosphere 17 km above us. Canterbury’s economy might not be hitting stratospheric heights as we roar into 2025, but the pluckiness of local companies like Kea – their aircraft weighs less than 40 kilograms and can withstand -50 degree temperatures – matches the continued resilience of the Canterbury economy in the face of challenging global headwinds.

Canterbury, it seems, is navigating tough conditions with a mixture of resilience and optimism. One standout is the continued growth in the number of businesses across Canterbury. In December 2024, the region boasted 78,600 businesses, up 2,000 from the same time in 2023, marking a 2.6% increase – above the national average of 1.9%.

Local businesses are not only growing but feeling optimistic about what lies ahead. A Business Canterbury survey conducted in November revealed 73% of Christchurch businesses expect the local economy to be stronger in a year’s time, with 66% anticipating improvements in their own financial performance. Both indicators have improved significantly over the last six months.

Investment, however, remains a cautious area. Despite the positive sentiment, the share of Christchurch businesses planning to invest in property, plant or equipment has remained steady at 56%, unchanged from six months ago. Certain sectors show higher investment intentions, with 80% of primary sector firms and 69% of software and technology firms planning investments over the next year. This sector-specific outlook suggests some industries are better positioned to expand while others are biding their time.

A crucial aspect of business success is consumer confidence as it drives demand, and recent data suggests a positive shift. Westpac’s latest survey of consumer sentiment showed a 9% increase in confidence across Canterbury during the December quarter. This pushed the region’s consumer confidence into positive territory for the first time since mid-2021 and Canterbury’s consumer confidence is outpacing the national average.

However, this improvement has not yet translated into significant retail spending gains. December’s retail card spending in Christchurch showed minimal growth, with in-store spending up just 0.3% from the previous year. While categories like apparel, groceries, and liquor experienced small uplifts, spending across other sectors remained flat or negative.

This subdued spending trend is likely tied to ongoing cost-of-living pressures. Results from the latest New Zealand Quality of Life Project show fewer Christchurch households (35%) feel they have enough income to meet daily needs, down from 46% in 2022. Housing affordability has also deteriorated, though perceptions in Christchurch remain slightly better than in other major cities.

On a more positive note, inflation has begun to ease, with the rate settling back to 2.2% in the December quarter, helping to reduce the financial strain on households. This is good news for both consumers and businesses, as it suggests a return to more stable economic conditions.

The labour market remains a challenge for both Canterbury and New Zealand. Job advertisements in the region dropped by 21% in the December quarter compared to the same time in 2023, a trend mirrored nationwide. The decline in demand for workers has been most noticeable in sectors like healthcare, IT, and sales, which have seen job ads fall by up to 34%.