Economic scorecard: Why are things so bad in Wellington?

New Zealand's economy is patchy at best, but Wellington is bottom of the table.ASB has released its latest economic scorecard, which shows Canterbury, Taranaki and Southland took the top three spots in the second quarter, boosted by Fonterra's capital return and strong export earnings.Bay of Plenty dropped down the ranks, from first in the previous quarter to 11th. Gisborne and Wellington were at the bottom of the table at 15th."Canterbury has the full package right now," acting chief economist Kim Mundy said. "High dairy prices boosted export returns, while continued population growth and major events supported by its new stadium helped support economic activity during the quarter."Households are spending, businesses are investing, the labour market remains resilient and strong dairy returns are providing an additional boost to the economy."Retail sales in Canterbury were up 8.8 percent year-on-year, the strongest growth in the country."What's interesting about the retail data is that we can see there's been a 4 percent year-on-year decline in tourism spending in the region, suggesting the strong retail sales in Q2 were driven by locals, rather than visitors," Mundy said.Canterbury's labour market held up well, with employment up 2.6 percent year-on-year. Canterbury had some of the lowest unemployment in the country at 3.6 percent.House prices rose 3.3 percent over the year and were almost back to their Covid peak.Mundy said Taranaki had lifted from near the bottom of the table to second, thanks to dairy and meat sector performance, and Fonterra's capital payout."We've got a two-speed economy at the moment with those rural sectors... doing much better than the North Island urban areas."Auckland was sixth. Mundy said its weak housing market was a drag on performance, and both sales and prices were down, compared to 2025.While new-car registrations rose strongly, partly reflecting demand for electric vehicles, and building consents showed healthy growth, other regions recorded even stronger gains in these areas, she said."Population growth and tourism are providing some support to the region, but Auckland's economy continues to contend with cost-of-living pressures, interest rates trending higher, a soft labour market and ongoing uncertainty. While these challenges may weigh on activity in the near term, the region remains well positioned to benefit, as economic conditions gradually improve."Wellington fared worse. House prices were still down almost 30 percent from the peak and Mundy said demand for housing had also fallen significantly.Wellington had experienced no population growth, a big drop in construction and a weak labour market.Mundy said Wellington had underperformed since the government started to focus on reducing spending, although that had not been seen in job numbers."We only see aggregate jobs, but it hasn't been as weak as you might have expected it to be," she said. "The housing market is a big thing there."You're not getting the population growth, so these do all feed into that broader malaise of the Wellington economy at the moment."She said the two-speed economy was likely to continue."We're not expecting to see a sharp turnaround, particularly because we do still expect to see that ongoing support to the economy from the export sectors in particular, while when you look at domestic demand, there are a number of headwinds still facing that, so we think the recovery from a sort of domestic perspective is going to be more gradual."She said it was a reminder that the Official Cash Rate in particular was a blunt tool, when the Reserve Bank was making decisions that could affect quite different economies."It is the tool that the Reserve Bank has to work with and I think, when we're looking at inflation, inflation is something that everyone is feeling across the board, irrespective of how the economy is evolving in those regions."If you are an inflation-targeting central bank, it's still going to serve its purpose there in terms of trying to bring inflation back to the midpoint of the 1-4 percent inflation target."Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make and spend money