Be careful reading regional economic headlines

Statistics New Zealand released its regional GDP series yesterday. The data gives a high level snapshot of regional industry composition, but be wary when looking at trends.

Before you read Statistics NZ’s release, consider the following.

Statistics NZ regional GDP uses a concept called nominal pricing. This means that changes in the data reflect not only actual growth in underlying production, but also the distractionary effects of inflation.

Economists would never look at growth in a nominal GDP series. Instead we would control for inflation so that we could measure whether there is actually more stuff being done or not. Such a concept is known as real GDP.

Obscuring districts within broader, more diverse regions is also confusing. Statistics NZ sells their story saying Queenstown is part of Otago, but later reveals headline Otago growth was more to do with milk production, lambs and the price of butter than anything else.

What confusing dribble, we now know nothing about the diversity of trends from the districts within Otago that do not focus on those industries. Regional economic data is of utmost importance to decision-makers, analysts and business people in our provinces.

For some reason Statistics NZ and other government departments are not held to the same standards when releasing regional data as they would national data.