26 Jun 2018

Economic confidence up in Bay of Plenty, but down in Auckland

3:59 pm on 26 June 2018

Regional economic confidence is up in six of 11 regions.

The most negative region for the June quarter in the Westpac McDermott Miller survey is Auckland, with the gloomy outlook largely due to slowing house prices.

The most negative region for the June quarter in the Westpac McDermott Miller survey is Auckland, with the gloomy outlook largely due to slowing house prices.

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Photo: RNZ / Cole Eastham-Farrelly

Economic confidence in Bay of Plenty rose sharply with 47 percent of households expecting the region to prosper over the coming year, only just pipped by Nelson, Marlborough and West Coast on 47 percent.

Westpac chief economist Dominick Stephens said the mix of changes in regional economic confidence reflects what is being seen through the whole economy.

"The housing market, the construction sector, that consumer side of the economy is slowing. Meanwhile, the export side of the economy is mostly doing very, very well."

He said the oil and gas exploration ban on new licences is affecting the number of households in Taranaki expecting the economy to strengthen there, sharply down 27 percent from the March quarter.

The spread of the cattle disease Mycoplasma bovis, particularly in dairying areas, has affected regional confidence.

"The dairy sector is experiencing fairly good returns which you would think would boast confidence but M bovis has really had an effect."

Mr Stephens said Auckland was the most negative region, due to in part of having about the weakest housing market in the country at the moment, with prices back to the same level as they were in August 2016.

"There is also just a lot of negative news about congestion, problems in the city, and I think that comes through in people's attitudes.

"This lack of confidence in Auckland does reflect what we are seeing on the ground, people are voting with their feet and they are leaving Auckland and moving to other regions."

Mr Stephens said some of those moving out of Auckland were heading to areas like Gisborne, Hawke's Bay and Bay of Plenty.

"That's boosting construction and house prices."

Bay of Plenty is the big turn around story of the survey.

Mr Stephens said years of struggling with the Kiwifruit disease, PSA and the Rena sinking meant it was the least confident region in the survey for a number of years.

"Bay of Plenty, quarter to quarter, has become the stand out region."

In Nelson, household confidence rose sharply from 13 percent in March to 47 percent in the June quarter.

Mr Stephens said this reflects a recovery in activity levels after a number of severe weather events earlier in the year which left a trail of destruction.