Q1 - March 2025 - Waikato Region
According to Infometrics provisional GDP estimates, the Waikato regional economy contracted 0.5% in the year to March 2025. The decline is the first since the year to September 2021, as revisions pulled the year to December 2024 up to unchanged from a year earlier. The decline was driven by construction, mining, and utilities industries, partially mitigated by growth in agriculture.
Consumer spending fell 0.4% in the year to March 2025, falling for the first time since March 2021. Lower spending from residents, combined with inflation results in residents spending less and receiving even less. Tourism expenditure growth remained positive, edging up 0.3%pa, but grew it slowest since September 2022.
Employment declines continued, down 0.7% in the year to March 2025, but more moderate than the 0.9% national decline. Lower employment was driven by declines across construction, retail trade, and administrative industries. The annual average unemployment rate remains at 5.6%, after hitting the highest rate for the region since September 2015 at the end of 2024.
The weak labour market has resulted in the number of Jobseeker Support recipients rising 11%pa, equating to nearly 2,500 people more than in the year to March 2024. The labour market is expected to begin to turn over the remainder of 2025, as more mortgage holders roll onto lower mortgage rates, driving spending and employment growth.
There have been mixed trends across the real estate market in the Waikato region. Listing numbers rose 11%pa in the year to March 2025, creating a surplus of stock of properties available for sale, resulting in downward pressure on house values as the average house value fell 1.8%pa. In the rental market trends have been different with upward pressure on residential rents remaining, as the average rent rose 5.0%pa to $521pw.
The performance of the primary sector should help support the Waikato economy over 2025. A substantial dairy payout off the back of much improved global dairy prices over the 2024/25 season should support economic activity. The current Fonterra farmgate milk price estimate for the 2024/25 season of $9.70-$10.30/kgMS results in a total dairy pay-out for estimate for Waikato of approximately $4.8b, up $1.1b from the previous season, assuming that current production levels are maintained.
