Regional economic sentiment rebounded sharply in several regions of New Zealand, owing to an improved dairy outlook, a prospect that has been raised since revision the 2016/2017 dairy payout forecasts to NZD 5 from NZD 4.60, said Westpac in a research note. Moreover, there have been additional rises in dairy prices just before to and during the interview period for this survey.
The regional economic confidence bolstered in nine regions out of 11. Southland, which is one of the most exposed dairying regions saw a net 20 percent of respondents being positive of the region’s economic direction, a change from pessimists outnumbering optimists, noted Westpac.
Also, gains were seen in Waikato and in Taranaki/ManawatuWhanganui. The rise in sentiment was smaller; however, it is a step towards right direction. Less exposed dairy regions, such as Otago and Canterbury, also seem to have picked up on good news. However, construction and tourism have probably raised the Otago result as well, according to Westpac.
Following five quarters at the top of the heap, the Bay of Plenty has finally been unseated as optimism in Wellington rises sharply. The optimism is probably due to strong increases in house prices in house prices in Wellington, implying a growth-minded outlook that is impacting people’s view of where their region is moving. However, in Bay of Plenty, optimists stilly greatly outnumber pessimists.
Auckland was the only region where regional economic sentiment dropped. For the third consecutive quarter, the share of consumers that were positive about the future narrowed. This is possibly due to declining home ownership rates because of house price rises and worries regarding household debt levels. Meanwhile, Gisborne and the Hawke’s Bay, where regional economic sentiment had dropped sharply in the last quarter, also saw a return to improved positivity, added Westpac.
