Regional economic sentiment rebounds in most parts of New Zealand, says Westpac

Regional economic sentiment rebounded in most parts of New Zealand in the June quarter, noted Westpac in a research report. It came in mixed throughout the nation in June, showed the Westpac-McDermott Miller Regional Economic Confidence survey. Several regions recorded a rise in confidence as compared to March, but there were declines in the nation’s two biggest population centres – Canterbury and Auckland. The sentiment index remains well below its highs in Canterbury.

The ongoing fall in sentiment in Auckland is more puzzling. Other activity indicators imply that Auckland has been amongst the most rapidly growing regions. Hence, it might be that economic confidence is being held back more by the city’s rising pains – houses are both unaffordable and in short supply, and its infrastructure is coming under rising strain, stated Westpac.

In Canterbury, there is an obvious reason for reduced optimism regarding the region’s economic prospects. In recent times, the rate of economic growth has slowed clearly, and jobless rate is on the rise.

Meanwhile, economic confidence was usually stronger for the more rural regions in the second quarter. Since the March survey, Fonterra has raised its farmgate milk price and has forecast an above-average price of $6.50/kg for the new season. While some of the rebound in dairying incomes will go towards debt reduction, there will also be room for additional spending on farm services. But the largest gains in sentiment this quarter were not in the dairy-intensive regions.

Improved export prices throughout meat, dairy, forestry and horticulture are likely to have boosted optimism in the rural regions. Consumer sentiment also improved in most regions, except Auckland.

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