Long-term Trends in Auckland s Business Demographics

Long-term Trends in Auckland s Business Demographics Ting Huang October 2018 Technical Report 2018/024

Long-term trends in Auckland s business demographics October 2018 Technical Report 2018/024 Ting Huang Research and Evaluation Unit Auckland Council Technical Report 2018/024 ISSN 2230-4525 (Print) ISSN 2230-4533 (Online) ISBN 978-1-98-856478-4 (Print) ISBN 978-1-98-856479-1 (PDF)

This report has been peer reviewed by the Peer Review Panel. Review completed on 4 October 2018 Reviewed by two reviewers Approved for Auckland Council publication by: Name: Eva McLaren Position: Manager, Research and Evaluation (RIMU) Name: Alison Reid Position: Manager, Economic and Social Research and Evaluation (RIMU) Date: 18 October 2018 Recommended citation Huang, T (2018). Long-term trends in Auckland s business demographics. Auckland Council technical report, TR2018/024 2018 Auckland Council This publication is provided strictly subject to Auckland Council s copyright and other intellectual property rights (if any) in the publication. Users of the publication may only access, reproduce and use the publication, in a secure digital medium or hard copy, for responsible genuine non-commercial purposes relating to personal, public service or educational purposes, provided that the publication is only ever accurately reproduced and proper attribution of its source, publication date and authorship is attached to any use or reproduction. This publication must not be used in any way for any commercial purpose without the prior written consent of Auckland Council. Auckland Council does not give any warranty whatsoever, including without limitation, as to the availability, accuracy, completeness, currency or reliability of the information or data (including third party data) made available via the publication and expressly disclaim (to the maximum extent permitted in law) all liability for any damage or loss resulting from your use of, or reliance on the publication or the information and data provided via the publication. The publication, information, and data contained within it are provided on an "as is" basis.

Executive summary Businesses are the backbone of the Auckland economy. They provide employment, education and training, produce a wide range of goods and services, generate investment and innovation, and contribute to social and cultural life in Auckland. The importance of ensuring the business sector can flourish is recognised in the Auckland Plan 2050, Auckland s long-term spatial plan, and in the accompanying Development Strategy. Understanding trends in the structure and distribution of Auckland s businesses and employment is vital to Auckland Council s ability to plan for the future, and to work with key stakeholders such as industry sectors, central government, non-governmental organisations and the private sector towards positive change. This report provides an overview of the business demographics in Auckland, as at February 2017. The report also analyses long-term trends in the structural and spatial distribution of Auckland s business demographics overall and specifically for some of the key industry sectors, for the period between February 2000 and February 2017. The report uses data taken from Statistics New Zealand s Business Demographic series released in 2017. Auckland s business demographics as at February 2017 As at February 2017, Auckland had more than a third of New Zealand s business units (192,378 units, 34%) and employment (755,400 employees, 35%). In particular, more than 40 per cent of New Zealand s business units and about half of New Zealand s employment in knowledge-intensive sectors namely Professional, Scientific and Technical Services; Financial and Insurance Services; and Information Media and Telecommunications were in Auckland. In 2017, the largest three industry sectors in Auckland, as measured by the number of business units, were Rental, Hiring and Real Estate Services (21% of the Auckland total), Professional, Scientific and Technical Services (14%), and Construction (11%). Professional, Scientific and Technical Services was the largest employment sector in Auckland, contributing 11 per cent to Auckland s total employment in 2017. This was followed by Manufacturing and Retail Trade, which both had 10 per cent of Auckland s total count of employees. Spatial analysis of the 2017 business demographics data shows that Auckland s business units were more concentrated in the local board areas of Waitematā (29,304 units), Howick (16,761 units), Albert-Eden (14,478 units) and Ōrākei (13,191 units). Larger shares of Auckland s employment were located in the local board areas of Waitematā (177,000 Long-term trends in Auckland s business demographics i

employees or 23% of the Auckland total) and Maungakiekie-Tāmaki (94,700 employees or 13%). The local board areas of Henderson-Massey, Waitākere Ranges, Waiheke, and Great Barrier and in the Southern Initiative 1 were less concentrated with business units and employment. Long-term trends in Auckland s business demographics as a whole and the key industry sectors Over the 17 years between 2000 and 2017, the number of business units and total employment in Auckland experienced an overall increase of 56 per cent and 45 per cent respectively. Although moderate declines were observed during the Global Financial Crisis (GFC) period between 2008 and 2010, Auckland managed to pick up again when the economy gradually started to recover in 2011. Trends for Auckland s key industry sectors, which have been significant or fast-growing over time, are summarised below. Manufacturing Manufacturing was one of the three largest employment sectors in Auckland over the period between 2000 and 2017. Since 2000, this sector had 10 per cent or more of Auckland s count of employees. However, between 2000 and 2017, the sector experienced an overall reduction of five per cent in its number of business units and seven per cent in its number of employees, and its share of total employment fell from 16 per cent in 2000 to 10 per cent in 2017. Whilst the Food Product Manufacturing and Machinery and Equipment Manufacturing sub-sectors grew significantly between 2000 and 2017, this was outweighed by the declines observed in most of the other Manufacturing sub-sectors, especially the Textile, Leather, Clothing and Footwear Manufacturing sub-sector. Over the same period, the number of business units and employees in this sub-sector reduced by a third and half respectively. The local board areas of Maungakiekie-Tāmaki and Howick had relatively large shares of Auckland s business units and employment in the Manufacturing sector. These two local board areas also had strong growth in Manufacturing relative to other local board areas. The relative higher concentrations of Manufacturing business units and employment in these two local board areas could be partly reflected by the higher share of Manufacturing 1 The Southern Initiative (TSI) is one of the two significant place-based initiatives established through the 2012 Auckland Plan (Auckland Council, 2012) covering the four local board areas of Māngere-Ōtāhuhu, Ōtara-Papatoetoe, Manurewa and Papakura. The purpose of the initiative is to plan and deliver a long-term programme of co-ordinated investment and actions to bring about transformational social, economic and physical change in this area. Long-term trends in Auckland s business demographics ii

in their local GDP. It may be also related to the fact that the two local board areas are the home to some of Auckland s key industrial areas of Southdown, Westfield, Mt Wellington (in Maungakiekie-Tāmaki) and East Tāmaki (in Howick). Professional, Scientific and Technical Services The Professional, Scientific and Technical Services sector contributed 16 per cent of the growth in Auckland s business units and employment between 2000 and 2017. Although moderate declines were observed during the GFC period as the sector s GDP fell by five per cent, the sector had an overall increase of 10,914 units and 37,800 employees. One contributing sub-sector to this growth was Management Advice and Consulting Services the number of business units increased from 4911 to 8628 units and employment doubled from 5100 to 10,300 employees in the period from 2000 to 2017. Financial and Insurance Services had the fastest rate of increase in the number of business units between 2000 and 2017 compared to other industry sectors in Auckland. At an annual growth rate of seven per cent, this sector contributed 16 per cent (10,827 units) of the total increase in Auckland s business units in the 17-year period. More than 90 per cent of this growth in Financial and Insurance Services was attributable to the Financial Asset Investing sub-sector. With regard to employment, the Financial and Insurance Services sector had 9400 more employees in 2017 compared to 2000 (a 56% increase), mostly in the sub-sectors of Banking (2100), General Insurance (2050), Other Auxiliary Finance and Investment Services (1900), and Financial Asset Investing (1270). Information Media and Telecommunications Although the number of business units in this sector increased between 2000 and 2017, even during the GFC period, the sector had four per cent fewer employees in 2017 compared to 2000. This could be due to an increase in the sector s productivity, or a possible increase in the proportion of the sector s business units being self-employed without employees or working proprietors. Whilst in 2000, the sector s business units and employment were largely distributed to the sub-sectors of Publishing and Motion Picture and Sound Recording Activities respectively, the sector saw a growing trend in the subsectors of Telecommunications; Internet Services Providers, Web Search Portals and Data Processing Services; and Internet Publishing and Broadcasting. This could be attributed to the emerging significance of internet and digital technology. Over the last 17 years between 2000 and 2017, the Waitematā Local Board area was particularly over-represented in business units and employment in the knowledge-intensive sectors, namely Professional, Scientific and Technical Services; Financial and Insurance Services; and Information Media and Telecommunications. This is not a surprising finding, as the city centre, the main hub of Auckland s knowledge-intensive sectors, is located in this local board area. However, it has been commonly observed that Waitematā s shares Long-term trends in Auckland s business demographics iii

in the number of business units in these sectors were decreasing over time, as they were growing at a slower rate relative to those located in other local board areas. Construction The Construction sector experienced the fastest rate of growth in employment. The number of employees more than doubled from 24,300 in 2000 to 50,700 in 2017, contributing 11 per cent to Auckland s total employment growth during this period. In particular, the Residential Building Construction sub-sector had a rapid increase in employment after 2012, driven by the booming Auckland housing market. Construction was also one of the three largest sectors in Auckland in terms of business units. Between 2000 and 2017, the number of Construction business units grew by more than 30 per cent (from 16,458 to 21,771 units). The strongest increases in Construction business units occurred in the local board areas of Howick and Rodney, and almost half of these were attributable to the increase in Residential Building Construction. This could be linked to a number of significant housing developments that took place since early 2000s in these two local board areas, for example, Kumeu-Huapai in the Rodney Local Board area and Flat Bush in the Howick Local Board area. Employment in the Construction sector was strongly concentrated in the local board area of Maungakiekie-Tāmaki, and more than a quarter of the Construction employment in the local board area was associated with Heavy and Civil Engineering Construction. The local board areas of Upper Harbour and Howick saw a significant rise in their shares of the total Construction employment in Auckland, with each contributed an increase of more than 2700 employees in Construction between 2000 and 2017 (10% of Auckland s employment growth in Construction). Conclusion This report highlights the long-term trends in the structural make up and geographic distribution of Auckland s business demographics and some of the key industry sectors. The findings can be used by council and other agencies to develop plans, strategies and programmes addressing the sectors or areas of Auckland that present challenges or opportunities for economic growth and thus contributing to greater prosperity for all Aucklanders. Long-term trends in Auckland s business demographics iv

Table of contents 1.0 Introduction... 1 2.0 Auckland s business demographics as at February 2017... 4 2.1 Distribution by industry sector... 4 2.2 Distribution by Auckland local board areas... 10 3.0 Overview of long-term trends in Auckland s business demographics... 15 3.1 Long-term trends in Auckland... 15 3.2 Overall changes between 2000 and 2017 by industry sector... 16 3.3 Link between trends in GDP and business demographics... 18 4.0 Long-term trends in selected industry sectors... 20 4.1 Manufacturing... 20 4.2 Professional, Scientific and Technical Services... 29 4.3 Financial and Insurance Services... 34 4.4 Information Media and Telecommunications... 43 4.5 Construction... 48 5.0 Conclusion... 59 6.0 References... 61 Appendix A Number of business units in New Zealand by ANZSIC Level 1 industry sector and employee count size group, as at February 2017... 63 Appendix B Auckland s business demographics by ANZSIC Level 2 industry sector, as at February 2017... 64 Appendix C Auckland s business demographics by ANZSIC Level 2 industry sector, February 2000 compared to February 2017... 69 List of figures Figure 1: Business units by ANZSIC Level 1 industry sector as a percentage of Auckland Total, as at February 2017... 6 Figure 2: Employee counts by ANZSIC Level 1 industry sector as a percentage of Auckland Total, as at February 2017... 9 Figure 3: Spatial distribution of business units in Auckland by local board area, as at February 2017... 13 Figure 4: Spatial distribution of employment in Auckland by local board area, as at February 2017... 14 Figure 5: Number of business units and employees across all industries in Auckland, February 2000 to February 2017... 16 Figure 6: Changes (%) in business units and employment in Auckland by ANZSIC Level 1 industry sector, February 2017 compared to February 2000... 18 Long-term trends in Auckland s business demographics v

Figure 7: Number of business units and employees in Auckland s Manufacturing sector, February 2000 to February 2017... 21 Figure 8: Auckland s business units in Manufacturing (%) by local board area, February 2000 and February 2017... 23 Figure 9: Auckland s employee counts in Manufacturing (%) by local board area, February 2000 and February 2017... 24 Figure 10: Changes in Manufacturing business units between February 2000 and February 2017 across Auckland s local board areas... 27 Figure 11: Changes in Manufacturing employment between February 2000 and February 2017 across Auckland s local board areas... 28 Figure 12: Number of business units and employees in Auckland s Professional, Scientific and Technical Services sector, February 2000 to February 2017... 30 Figure 13: Trend in Auckland s GDP ($ million) from Professional, Scientific and Technical Services, year end March 2000 to year end March 2017... 30 Figure 14: Number of business units in Professional, Scientific and Technical Services in the Waitematā Local Board and other local boards, February 2000 to February 2017... 32 Figure 15: Employee counts in Professional, Scientific and Technical Services in the Waitematā Local Board and other local boards, February 2000 to February 2017... 33 Figure 16: Number of business units and employees in Auckland s Financial and Insurance Services sector, February 2000 to February 2017... 36 Figure 17: Number of business units in Financial and Insurance Services in the Waitematā Local Board and Auckland, February 2000 to February 2017... 39 Figure 18: Percentage change in the Financial and Insurance Services sector s business units in each local board, between February 2000 and February 2017... 40 Figure 19: Employee counts in Financial and Insurance Services in the Waitematā Local Board and in Auckland, February 2000 to February 2017... 41 Figure 20: Percentage change in the Financial and Insurance Services sector s employment in each local board, between February 2000 and February 2017... 42 Figure 21: Number of business units and employees in Auckland s Information Media and Telecommunications sector, February 2000 to February 2017... 44 Figure 22: Business units and employment (%) within Auckland s Information Media and Telecommunications sector located in Waitematā Local Board and other local boards, February 2000 and February 2017... 47 Figure 23: Number of business units and employees in Auckland s Construction sector, February 2000 to February 2017... 49 Figure 24: Trend in Construction s contribution to Auckland s GDP ($ million), year end March 2000 to year end March 2017... 50 Figure 25: Employment in Building Construction activities in Auckland, February 2000 to February 2017... 52 Figure 26: Auckland s business units in Construction (%) by local board area, February 2000 and February 2017... 53 Figure 27: Changes in Construction business units between February 2000 and February 2017 across Auckland s local board areas... 55 Figure 28: Auckland s employee counts in Construction (%) by local board area, February 2000 and February 2017... 57 Figure 29: Changes in Construction employment between February 2000 and February 2017 across Auckland s local board areas... 58 Long-term trends in Auckland s business demographics vi

List of tables Table 1: Business units by ANZSIC Level 1 industry sector, as at February 2017... 5 Table 2: Employee counts by ANZSIC Level 1 industry sector, as at February 2017... 8 Table 3: Number of business units and employment in Auckland by local board area, as at February 2017... 11 Table 4: GDP contribution by a selection of key industry sectors in Auckland, year end March 2017 compared to year end March 2000... 19 Table 5: Business units and employee counts in Manufacturing sub-sectors at ANZSIC Level 2, February 2000 and February 2017... 22 Table 6: Manufacturing s contribution to GDP in Maungakiekie-Tāmaki, Howick and other local board areas, year end March 2000 and year end March 2017... 25 Table 7: Business units and employee counts in sub-sectors of Professional, Scientific and Technical Services at ANZSIC Level 2, February 2017 compared to February 2000... 31 Table 8: Business units in selected Professional, Scientific and Technical Services activities in Waitematā Local Board and Auckland, February 2000 and February 2017... 33 Table 9: Employee counts in selected Professional, Scientific and Technical Services activities in Waitematā Local Board and Auckland, February 2000 and February 2017... 34 Table 10: Business units and employee counts in Financial and Insurance Services by sub-sector activities at ANZSIC Level 5, February 2000 and February 2017... 38 Table 11: Business units and employee counts in Information Media and Telecommunication sub-sectors at ANZSIC Level 2, February 2000 and February 2017. 46 Table 12: Business units and employee counts in the Information Media and Telecommunications sector by local board, February 2000 and February 2017... 48 Table 13: Business units and employee counts in Construction by sub-sector, February 2000 and February 2017... 51 Table 14: Number of business units in New Zealand by ANZSIC Level 1 industry sector and employee count size group, as at February 2017... 63 Table 15: Business units and employee counts in Auckland by ANZSIC Level 2 industry sector, February 2017... 64 Table 16: Business units and employee counts in Auckland by ANZSIC Level 2 industry sector, February 2000 compared to February 2017... 69 Long-term trends in Auckland s business demographics vii

1.0 Introduction Businesses are the backbone of the Auckland economy. They play a vital role in Auckland s social, economic and environmental landscape. Businesses provide employment, education and training, produce a wide range of goods and services, and contribute to social and cultural life in Auckland. The importance of ensuring the business sector can flourish is recognised in the Auckland Plan 2050, Auckland s long-term spatial plan. The plan sets out an intention to deliver an Auckland that is prosperous with many opportunities and delivers a better standard of living for everyone (Auckland Council, 2018a). It recognises that businesses help drive economic growth through creating employment, encouraging innovation and attracting investment, and identifies three strategic directions by which this can be achieved, namely: 1. Create the conditions for a resilient economy 2. Attract and retain skills, talent and investment 3. Develop skills and talent for the changing nature of work and lifelong achievement. 2 As Auckland grows and develops in the decades to come, it s important that appropriate land and infrastructure is available to support businesses, and that there is equitable and affordable access to employment. The Development Strategy for Auckland (Auckland Council, 2018b) addresses the supply of business land and supporting infrastructure based on the capacity specified in the Auckland Unitary Plan (Auckland Council, 2016) to create a business-friendly environment in Auckland. Understanding trends in the structure and distribution of Auckland s businesses and employment is vital to Auckland Council s ability to plan for the future, and to work with key stakeholders such as industry sectors, central government, nongovernmental organisations and the private sector towards positive change. 2 For more details on the directions and focus areas identified under this outcome, please refer to The Auckland Plan 2050 at www.theaucklandplan.govt.nz Long-term trends in Auckland s business demographics 1

This report This report provides a high-level overview of Auckland s business demographics in 2017. It also analyses trends for Auckland as a whole and for several key industry sectors, over the period between 2000 and 2017. The analysis presented here draws from Statistics New Zealand s Business Demographics data series for 2000 to 2017, released in October 2017. 3 The data provides annual snapshots, as at February of each year, of the structure and characteristics of New Zealand businesses. It covers economically significant individual, private-sector and public-sector enterprises that are engaged in the production of goods and services in New Zealand. These enterprises are maintained on the Statistics New Zealand Business Register (BR), which generally includes all employing units and those enterprises with GST turnover greater than $30,000 per year. The enterprises are grouped into the industry sectors under the Australian and New Zealand Standard Industrial Classification (ANZSIC). The size of each sector can be measured by: Geographic/business unit a separate operating unit engaged in one, or predominately one, kind of economic activity from a single physical location or base (as used in Statistics New Zealand s Business Demography data). Employee counts a head-count of all salary and wage earners; this excludes those who are self-employed without employees and working proprietors. For simplicity of interpretation, the term geographic unit will be referred to as business unit in the rest of this report. Employee counts will sometimes be referred to as employment or number of employees interchangeably. Some parts of the report also refer to figures on Gross Domestic Product (GDP). These are based on Infometrics estimates of GDP. 4 3 Business Demographics statistics can be retrieved via the NZ.Stat data tool online http://nzdotstat.stats.govt.nz/wbos/index.aspx 4 Infometrics is an economic consultancy firm in New Zealand. It publishes series of GDP estimates, in constant 2010 prices, for years ended March 2000 to 2017, at both the national and regional level. Infometrics also publishes GDP data by ANZSIC industries for Auckland s 21 local board areas (via Auckland Council subscription). For this reason, Infometrics GDP data are used in some parts of this report to provide more contextual discussion. Long-term trends in Auckland s business demographics 2

The report is structured as follows: Section 2 gives a high level snapshot of Auckland s business demographics as at February 2017, with breakdowns by industry sector and by Auckland s local boards. Section 3 provides an overview of the long-term trends since year 2000 for Auckland as a whole, and briefly discusses changes in industry sectors at the ANZSIC Level 1 breakdown. Sections 4 analyses the overall trends and changes in the structural and spatial distribution of Auckland s key industry sectors. Section 5 highlights the main findings and concludes the report. Note that the results presented in section 3 and section 4 of the report uses annual data taken from the Business Demographic series released in 2017. They are not comparable with Business Demographics data released in previous years, due to changes in methodology and revision by Statistics New Zealand. It is important to note that, while there may be many drivers or reasons, at the global, national or local level, behind the changes in Auckland s demographics, these will not be explored in this report. Several parts of the report only included commentaries on some of the possible or related drivers. Long-term trends in Auckland s business demographics 3

2.0 Auckland s business demographics as at February 2017 This section provides a high-level snapshot of Auckland s business demographics as at February 2017. The number of business units and employees in Auckland will be disaggregated by industry sectors defined in the ANZSIC Level 1 industry classification. Distribution of Auckland s business units and employment by local board area are also presented. 2.1 Distribution by industry sector 2.1.1 Business units by ANZSIC Level 1 industry sector As at February 2017, there were 192,378 business units located in Auckland (Table 1). The breakdown of business units by ANZSIC Level 1 industry shows Rental, Hiring and Real Estate Services had the largest number of business units 40,335 units or 21 per cent of the Auckland total. This was followed by Professional, Scientific and Technical Services (14%) and Construction (11%). The industry sectors with the smallest number of business units were Mining (99 units, 0.1% of the Auckland total), Electricity, Gas, Water and Waste Services (381 units, 0.2%) and Public Administration and Safety (852 units, 0.7%). More than a third of New Zealand s business units in New Zealand were located in Auckland (34%). Auckland was particularly over-represented in the following sectors: Information Media and Telecommunications (50% of the sector s count in New Zealand) Wholesale Trade (48%) Professional, Scientific and Technical Services (45%) Administrative and Support Services (44%) Financial and Insurance Services (41%). In contrast, most of New Zealand s business units engaged in the Agriculture, Forestry and Fishing sector (66,405 or 94% of the sector s count in New Zealand) and Mining sector (741 units or 88%) were found in areas outside Auckland. Long-term trends in Auckland s business demographics 4

Table 1: Business units by ANZSIC Level 1 industry sector, as at February 2017 Auckland New Zealand As a % of New Zealand Number % Number % % Agriculture, Forestry and Fishing 4482 2.3 70,887 12.6 6.3 Mining 99 0.1 840 0.1 11.8 Manufacturing 8016 4.2 22,767 4.0 35.2 Electricity, Gas, Water and Waste Services 381 0.2 1536 0.3 24.8 Construction 21,771 11.3 60,636 10.8 35.9 Wholesale Trade 10,029 5.2 21,000 3.7 47.8 Retail Trade 13,809 7.2 35,367 6.3 39.0 Accommodation and Food Services 7536 3.9 22,833 4.1 33.0 Transport, Postal and Warehousing 6906 3.6 17,802 3.2 38.8 Information Media and Telecommunications 3183 1.7 6333 1.1 50.3 Financial and Insurance Services 16,125 8.4 38,997 6.9 41.3 Rental, Hiring and Real Estate Services 40,335 21.0 112,020 19.9 36.0 Professional, Scientific and Technical 27,342 14.2 61,065 10.8 44.8 Services Administrative and Support Services 8205 4.3 18,684 3.3 43.9 Public Administration and Safety 852 0.4 3723 0.7 22.9 Education and Training 3357 1.7 10,953 1.9 30.6 Health Care and Social Assistance 8010 4.2 22,341 4.0 35.9 Arts and Recreation Services 3522 1.8 10,635 1.9 33.1 Other Services 8418 4.4 24,882 4.4 33.8 Total Industry 192,378 100.0 563,295 100.0 34.2 Figure 1 below shows the percentage breakdown of Auckland s count of business units in 2017 by ANZSIC Level 1 industry sector. The sectors are displayed in the order of their shares of the total count. Long-term trends in Auckland s business demographics 5

Figure 1: Business units by ANZSIC Level 1 industry sector as a percentage of Auckland Total, as at February 2017 Rental, Hiring and Real Estate Services Professional, Scientific and Technical Services Construction Financial and Insurance Services Retail Trade Wholesale Trade Other Services Administrative and Support Services Manufacturing Health Care and Social Assistance Accommodation and Food Services Transport, Postal and Warehousing Agriculture, Forestry and Fishing Arts and Recreation Services Education and Training Information Media and Telecommunications Public Administration and Safety Electricity, Gas, Water and Waste Services Mining 5.2 4.4 4.3 4.2 4.2 3.9 3.6 2.3 1.8 1.7 1.7 0.4 0.2 0.1 8.4 7.2 11.3 14.2 21.0 0 5 10 15 20 25 Percentage (%) of Auckland Total 2.1.2 Employee counts by ANZSIC Level 1 industry sector As at February 2017, there were 755,400 employees recorded across all industries in Auckland (Table 2). The Professional, Scientific and Technical Services sector was Auckland s largest employment sector, with 82,100 employees (11% of the Auckland total). Manufacturing (75,700 or 10%) and Retail Trade (73,100 or 10%) were Auckland s second and third largest sectors in terms of their employment. Similar to the observations for business units, the Mining (390 employees, 0.1% of the Auckland total) and Electricity, Gas, Water and Waste Services (4700 or 0.6%) sectors had the smallest number of employees in Auckland. Although for Public Administration and Safety whilst they had less than one per cent of Auckland s business units (852 units), the sector made up four per cent (31,800) of Auckland s total employment, and similarly for New Zealand as a whole. This is expected as the Public Administrative and Safety sector tends to have large organisations. As indicated in the business demographics data at the national level, 13 per cent of the business units in this sector had 50 or more employees. This compared to just above one per cent for New Zealand as a whole. Long-term trends in Auckland s business demographics 6

Also note that whilst Rental, Hiring and Real Estate Services had the largest number of business units in Auckland, however, it only had two per cent of Auckland s employment. This substantial difference could be due to the exclusion of those who were self-employed without employees and working proprietors in Statistics New Zealand s employee count data. Business demographics data at the national level shows that more than nine in ten (94%) of New Zealand s business units in Rental, Hiring and Real Estate Services had zero number of employees. Although data on business units by employee count size category is not available at the Auckland level, but it is expected to be of a similar proportion. A table of the number of business units in New Zealand, as at February 2017, by employee count size group and ANZSIC Level 1 Industry sector is provided in Appendix A for reference. Almost 35 per cent of New Zealand s total employment was found in Auckland. Auckland employment was particularly over-represented in: Information Media and Telecommunications (53% of the sector s count in New Zealand) Wholesale Trade (51%) Financial and Insurance Services (51%) Professional, Scientific and Technical Services (46%) Administrative and Support Services (44%). These were the also same top five industries that were over-represented in Auckland in terms of business units. Long-term trends in Auckland s business demographics 7

Table 2: Employee counts by ANZSIC Level 1 industry sector, as at February 2017 Auckland New Zealand As a % of New Zealand Number % Number % % Agriculture, Forestry and Fishing 5900 0.8 117,400 5.4 5.0 Mining 390 0.1 5400 0.2 7.2 Manufacturing 75,700 10.0 226,400 10.5 33.4 Electricity, Gas, Water and Waste Services 4700 0.6 15,400 0.7 30.5 Construction 50,700 6.7 159,300 7.4 31.8 Wholesale Trade 57,100 7.6 111,700 5.2 51.1 Retail Trade 73,100 9.7 212,500 9.8 34.4 Accommodation and Food Services 56,500 7.5 163,900 7.6 34.5 Transport, Postal and Warehousing 36,700 4.9 91,800 4.2 40.0 Information Media and Telecommunications 19,500 2.6 37,100 1.7 52.6 Financial and Insurance Services 27,500 3.6 54,100 2.5 50.8 Rental, Hiring and Real Estate Services 13,300 1.8 32,600 1.5 40.8 Professional, Scientific and Technical 82,100 10.9 177,300 8.2 46.3 Services Administrative and Support Services 50,100 6.6 114,400 5.3 43.8 Public Administration and Safety 31,800 4.2 118,900 5.5 26.7 Education and Training 62,200 8.2 180,800 8.4 34.4 Health Care and Social Assistance 70,800 9.4 230,300 10.7 30.7 Arts and Recreation Services 12,900 1.7 41,400 1.9 31.2 Other Services 24,400 3.2 70,800 3.3 34.5 Total Industry 755,400 100.0 2,161,500 100.0 34.9 Figure 2 provides a graphical representation of each ANZSIC Level 1 industry sector in the order of their percentage contribution to Auckland s employment as at February 2017. Long-term trends in Auckland s business demographics 8

Figure 2: Employee counts by ANZSIC Level 1 industry sector as a percentage of Auckland Total, as at February 2017 Professional, Scientific and Technical Services Manufacturing Retail Trade Health Care and Social Assistance Education and Training Wholesale Trade Accommodation and Food Services Construction Administrative and Support Services Transport, Postal and Warehousing Public Administration and Safety Financial and Insurance Services Other Services Information Media and Telecommunications Rental, Hiring and Real Estate Services Arts and Recreation Services Agriculture, Forestry and Fishing Electricity, Gas, Water and Waste Services Mining 0.8 0.6 0.1 1.8 1.7 4.9 4.2 3.6 3.2 2.6 8.2 7.6 7.5 6.7 6.6 10.9 10.0 9.7 9.4 0 2 4 6 8 10 12 Percentage (%) of Auckland Total For breakdowns of Auckland s business units and employee counts by ANZSIC Level 2 industry sector, please refer to Appendix B. Figure 1 and 2 also highlight the significant differences between the shares of employment and business unit for a number of sectors, with their average employee counts per business unit being significantly different compared to the Auckland average (approximately four employees per business unit). These were: Rental, Hiring and Real Estate Services, with less than one employee per business unit Construction, with an average employee count size about two Manufacturing, which had nine employees per business unit on average Health Care and Social Assistance average employee count of nine per business unit Public Administration and Safety 40 employees per business unit on average. Long-term trends in Auckland s business demographics 9

2.2 Distribution by Auckland local board areas Table 3 shows the distribution of Auckland s business units and employment 5 across Auckland s 21 local board areas. As at February 2017, the largest number of business units and employees were recorded in the Waitematā Local Board area. More than 15 per cent (29,304) of Auckland s business units and nearly a quarter (177,000 or 23%) of Auckland s total count of employees were found in this local board area. This is not surprising given that Auckland s city centre is within the local board s territory. The central business district (CBD) area 6 alone accounted for six per cent (12,405) of Auckland s business units and 13 per cent (99,700 employees) of Auckland s employment. Howick Local Board had the second largest number of business units in Auckland 16,761 units or nine per cent of the Auckland total. However, the local board area with the second largest number of employees was Maungakiekie-Tāmaki, which contributed 13 per cent (94,700) to Auckland s total employment as at February 2017. This could be due to the larger average employee count size for the business units located in Maungakiekie-Tāmaki nine employees per unit compared to three for Howick. 5 The figures presented here for employees in each local board area do not necessarily translate directly into employees who work in that location as some are required to travel and work in different locations, for example tradesmen. The figures may reflect the location of their head office. 6 Auckland s central business district (CBD) area is made up of three Census Area Units (CAUs), namely Auckland Central West, Auckland Central East and Auckland Harbourside. Long-term trends in Auckland s business demographics 10

Table 3: Number of business units and employment in Auckland by local board area, as at February 2017 Business units Employee Counts Number % Number % Rodney 9717 5.1 15,500 2.1 Hibiscus and Bays 11,508 6.0 20,000 2.6 Upper Harbour 10,659 5.5 43,600 5.8 Kaipātiki 9519 4.9 27,200 3.6 Devonport-Takapuna 9327 4.8 30,200 4.0 Henderson-Massey 8880 4.6 32,100 4.2 Waitākere Ranges 4878 2.5 6500 0.9 Great Barrier 144 0.1 250 0.0 Waiheke 1443 0.8 3050 0.4 Waitematā 29,304 15.2 177,000 23.4 Whau 7014 3.6 25,800 3.4 Albert-Eden 14,478 7.5 42,500 5.6 Puketāpapa 5073 2.6 10,900 1.4 Ōrākei 13,191 6.9 19,500 2.6 Maungakiekie-Tāmaki 10,725 5.6 94,700 12.5 Howick 16,761 8.7 54,200 7.2 Māngere-Ōtāhuhu 4557 2.4 46,200 6.1 Ōtara-Papatoetoe 6153 3.2 44,300 5.9 Manurewa 4863 2.5 22,900 3.0 Papakura 4260 2.2 16,700 2.2 Franklin 9930 5.2 22,500 3.0 Total Auckland 192,378 100.0 755,400 100.0 The map in Figure 3 shows that local boards in the isthmus and east had higher concentrations of business units. Business units were found less concentrated in the west Auckland local boards, in Waiheke and Great Barrier, and the four local board areas in the Southern Initiative. Business units in the three central Auckland local board areas, namely Waitematā (29,304 units), Albert-Eden (14,478 units) and Ōrākei (13,191 units) altogether made up almost 30 per cent (56,973 units) of the Auckland total. Similar to the spatial pattern observed for business units, there was variation in the distribution of employment across Auckland s 21 local board areas. Figure 4 shows low concentrations of employment in the local board area of Waitākere Ranges in west Auckland, and Waiheke and Great Barrier local board areas, which altogether had only one per cent (9300) of Auckland s total employment. A higher concentration of employment was found in the central Auckland local board areas of Waitematā (177,000 or 23% of the Auckland total) and Maungakiekie-Tāmaki (94,700 or 13%). The rest of Auckland employment (474,400 or 63%) was dispersed across the local Long-term trends in Auckland s business demographics 11

board areas in north, east, south and parts of central Auckland, with relatively higher employment located in: Upper Harbour (north) 43,600 employees Albert-Eden (central) 42,500 employees Māngere-Ōtāhuhu (south) 46,200 employees Ōtara-Papatoetoe (south) 44,300 employees Howick (east) 54,200 employees. Long-term trends in Auckland s business demographics 12

Figure 3: Spatial distribution of business units in Auckland by local board area, as at February 2017 Great Barrier Business units in 2017 1000 units or less 1001-5000 units 5001-9000 units 9001-12,000 units 12,001-20,000 units More than 20,000 units Local board boundary Rodney Hibiscus and Bays Upper Harbour Kaipātiki Devonport-Takapuna Waiheke Waitematā Henderson-Massey Albert-Eden Ōrākei Waitākere Ranges Whau Puketāpapa Maungakiekie-Tāmaki Māngere-Ōtāhuhu Ōtara-Papatoetoe Howick Manurewa Papakura Franklin Long-term trends in Auckland s business demographics 13

Figure 4: Spatial distribution of employment in Auckland by local board area, as at February 2017 Great Barrier Employment in 2017 250-6500 employees 6501-20,000 employees 20,001-32,100 employees 32101-54,200 employees 54,201-94,700 employees 94,701-177,000 employees Local board boundary Rodney Hibiscus and Bays Upper Harbour Kaipātiki Devonport-Takapuna Waiheke Waitematā Henderson-Massey Albert-Eden Ōrākei Waitākere Ranges Whau Puketāpapa Maungakiekie-Tāmaki Māngere-Ōtāhuhu Ōtara-Papatoetoe Howick Manurewa Papakura Franklin Long-term trends in Auckland s business demographics 14

3.0 Overview of long-term trends in Auckland s business demographics This section looks at the long-term trends in Auckland s business demographics since 2000. The section begins with a brief overview of the trends in business units and employee counts for Auckland as a whole. Overall percentage changes in business units and employee counts between 2000 and 2017 are also presented for industry sectors at ANZSIC Level 1. 3.1 Long-term trends in Auckland Overall, the number of business units and employees in Auckland has increased steadily since 2000. However, one exception was observed for the period between 2008 and 2010 the time when New Zealand s economy was affected by the GFC. During this time, Auckland s GDP also decreased by about four per cent (a $2590 million decrease). 7 The GFC may have had a stronger impact on Auckland s employment compared to its impact on business units. As indicated in Figure 5, employee numbers declined by four per cent between February 2008 and 2010 (from 648,000 to 619,000).In contrast, the number of business units in Auckland remained nearly constant, varying between 161,000 and 163,000 during this time. In contrast, the number of business units in Auckland remained nearly constant, varying between 161,000 and 163,000 during this time. This divergence between employment and business unit declines during the GFC corresponded to a slight reduction in average employee count per business unit, from four employees per business unit to just below four (3.8). Overall, Auckland experienced: An increase of 69,000 business units (56%) from 123,000 to 192,000 units between February 2000 and 2017. An increase of 233,000 employees (45%) from 522,000 to 755,000 employees between February 2000 and 2017. 7 Infometrics GDP estimates Long-term trends in Auckland s business demographics 15

Figure 5: Number of business units and employees across all industries in Auckland, February 2000 to February 2017 Business units (000) Employees (000) 250 724 755 800 200 150 522 123 648 626 619 631 162 163 161 163 185 192 700 600 500 400 100 300 50 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 Business units Employees 3.2 Overall changes between 2000 and 2017 by industry sector Figure 6 shows the percentage change in Auckland s business units and employees by ANZSIC Level 1 industry sector between 2000 and 2017. Construction had the strongest employment growth, with its count of employees in 2017 more than double (a 109% increase, from 24,300 to 50,700) its count in 2000. With the number of business units in Construction only grew by 32 per cent (from 16,458 to 21,771 units), the average employee count size per Construction business unit increased from 1.5 to 2.3 employees per unit by 2017. There was also strong employment growth in Accommodation and Food Services; and Professional, Scientific and Technical Services, with their employee numbers increased by 87 per cent (from 30,200 to 56,500) and 85 per cent (from 44,300 to 82,100) respectively. Financial and Insurance Services; and Rental, Hiring and Real Estate Services saw rapid growth in their numbers of business units, which increased by 204 per cent (from 5298 units to 16,125 units) and 118 per cent (from 18,501 units to 40,335 units) respectively. However, growth in their employment was not as strong. In February 2017, there were 9400 more people employed in Financial and Insurance Services (a 52% increase) and 5900 more employed in Rental, Hiring and Real Estate Services (an 80% increase) compared to 2000. Long-term trends in Auckland s business demographics 16

During the same period, two sectors, namely Agriculture, Forestry and Fishing; and Manufacturing, had overall reductions in both the number of business units and employees. The number of business units and people employed in Agriculture, Forestry and Fishing fell by 31 per cent (from 6510 to 4482) and eight per cent (from 6400 to 5900) respectively. Although the declines in Manufacturing were relatively small in terms of percentage of the sector, there were 5600 fewer people employed in the Manufacturing sector in 2017 compared to 2000. As employment in most of the other sectors grew, Manufacturing s share of Auckland s total employment fell from 16 per cent in 2000 to 10 per cent in 2017. It is noteworthy that, Information Media and Telecommunications saw a relatively strong growth of 88 per cent in the number of business units (from 1689 to 3183 units). At the same time, with 900 fewer employees (a 4% decrease) recorded in 2017 compared to 2000; the average business unit size of the sector halved from 12 employees per business unit to six employees. Long-term trends in Auckland s business demographics 17

Figure 6: Changes (%) in business units and employment in Auckland by ANZSIC Level 1 industry sector, February 2017 compared to February 2000 Agriculture, Forestry and Fishing -31-8 Mining 27 26 Manufacturing -5-7 Electricity, Gas, Water and Waste Services 34 68 Construction 32 109 Wholesale Trade 9 22 Retail Trade 43 42 Accommodation and Food Services 89 87 Transport, Postal and Warehousing 31 18 Information Media and Telecommunications -4 88 Financial and Insurance Services 52 204 Rental, Hiring and Real Estate Services 80 118 Professional, Scientific and Technical Services 66 85 Administrative and Support Services 45 62 Public Administration and Safety 14 65 Education and Training Health Care and Social Assistance 68 62 68 73 Arts and Recreation Services 32 72 Other Services 38 48-40 -20 0 20 40 60 80 100 120 140 160 180 200 220 Percentage (%) change since February 2000 Business units Employees For detailed breakdowns of changes in Auckland s business units and employee counts between 2000 and 2017 by industry sector at ANZSIC Level 2, please refer to Appendix C. 3.3 Link between trends in GDP and business demographics Notable changes in employment in some industry sectors could be partly linked to the long-term trends in their contribution to Auckland s Gross Domestic Product (GDP). Long-term trends in Auckland s business demographics 18

Infometrics GDP data for Auckland shows that between 2000 and 2017, Auckland had a GDP growth of 73 per cent, from $51,934 million in the year end March 2000 to $90,002 million in the year end March 2017. Forty per cent of this GDP growth was in four industry sectors, namely Professional, Scientific and Technical Services; Financial and Insurance Services; Rental, Hiring and Real Estate Services; and Information Media and Telecommunications. With an annual sector growth rate of 3.8 per cent (as compared to the total Auckland average of 3.3%), the Construction sector also contributed six per cent ($2350.5 million) to Auckland s GDP growth between 2000 and 2017 (see Table 4 below). Manufacturing grew the least in terms of GDP. Although the sector contributed the largest share (over 15%) to Auckland s GDP in 2000, due to a sluggish growth at an annual rate of 0.1 per cent between 2000 and 2017, its share in Auckland s GDP in 2017 decreased significantly just below 10 per cent. This trend could also be reflected in the reduction of Manufacturing business units and employment between 2000 and 2017 as previously shown in Figure 6. Table 4: GDP contribution by a selection of key industry sectors in Auckland, year end March 2017 compared to year end March 2000 Contribution to Auckland s GDP in 2000 ($ million) As a % of Auckland s GDP in 2000 Contribution to Auckland s GDP in 2017 ($ million) As a % of Auckland s GDP in 2017 Growth in GDP 2000-2017 Manufacturing 7839.3 15.1 8645.9 9.6 806.6 Professional, Scientific and Technical Services Financial and Insurance Services Rental, Hiring and Real Estate Services 4865.7 9.4 8976.8 10.0 4111.1 3466.2 6.7 7804.5 8.7 4338.3 3722.0 7.2 7246.0 8.1 3524.00 Construction 2627.8 5.1 4978.3 5.5 2350.5 Information Media and Communications 1754.0 3.4 5040.5 5.6 3286.5 Auckland Total 51,933.8 100.0 90,001.6 100.0 38,067.8 Source: Informetrics, 2017 Note: Infometrics estimates real GDP for Auckland for years end in March. GDP is measured in 2010 prices. Long-term trends in Auckland s business demographics 19

4.0 Long-term trends in selected industry sectors This section analyses long-term trends for some industry sectors in Auckland. The following sectors have been chosen for the analysis, on the basis that they displayed notable changes in Auckland s business demographics (see Figure 6) and their contribution to Auckland s GDP (Table 4): Manufacturing (largest employer in 2000, largest decline in employment between 2000 and 2017) Professional, Scientific and Technical Services (largest employer in 2017) Financial and Insurance Services (largest increase in the number of business units between 2000 and 2017). Information Media and Telecommunications (fastest growth in GDP between 2000 and 2017) Construction (fastest growth in employment between 2000 and 2017). Each of the key sectors listed above is considered in turn below. For each sector, the analysis will look at: the overall trend in the number of business units and employees the structural distribution across sub-sectors the spatial distribution across Auckland s 21 local board areas. 4.1 Manufacturing 4.1.1 Overall trend in the broad Manufacturing sector Manufacturing was one of the three largest employment sectors in Auckland between 2000 and 2017. Since 2000, this sector contributed at least one in every 10 (i.e. 10% or above) of Auckland s count of employees. However, Manufacturing has contracted noticeably in its relative size. As shown in Figure 7, between 2000 and 2017, the sector experienced an overall reduction of five per cent in its number of business units and seven per cent in its number of employees. This change comprised of: a general decrease by four per cent (315 fewer units) in business units and employment (3700 fewer employees) between 2005 and 2008 Long-term trends in Auckland s business demographics 20