After posting a 10-year high in December, confidence in the Bay of Plenty's economy moderated in the March quarterly Westpac McDermott Miller survey. But local business leaders say they don't see the results as a cause for concern.
A net 25 per cent of households expect the region's economy to strengthen over the next 12 months, down from a strong 50 per cent last quarter, and the lowest reading since September 2015.
The Bay of Plenty slipped down into the middle of the regional confidence rankings after being in the top two spots for the past two years.
"Bay of Plenty residents have become less optimistic about the region's economic prospects," said Westpac acting chief economist Michael Gordon. "But with a number of positives still in play, including a strong horticulture sector, booming tourism, and strong population growth, sentiment remains firmly upbeat."
Improving labour market conditions were also likely to have bolstered confidence in the region's economy, the survey said.
Tauranga Chamber of Commerce chief executive Stan Gregec said the drop in confidence was a surprise, and that it was possible people were factoring in uncertainties from what they were interpreting from the international environment.
"It hasn't really been reflected in what we're seeing and hearing here in the Bay," he said.
"It's full steam ahead as far as the business community is concerned, with lots of current activity on all fronts. We're not too worried at this stage. We think the current level of economic growth and activity is strong and sustainable for some time yet."
Priority One chief executive Nigel Tutt said he saw nothing to worry about in the latest results.
"The survey is still a very upbeat result and it's worth bearing in mind that the one before that was huge," he said.
"It's coming off a very high base and is still very positive and upbeat. There's nothing in that result or in anything that we're hearing to suggest there are any major dark clouds on the horizon."
Separately, the Westpac McDermott Miller survey also examines consumers' views on their own economic situation. In that survey, Bay of Plenty consumer confidence unwound last quarter's gains, falling from 115 in December back down to 107, below the nationwide average of 112.
"Households are feeling less upbeat about the outlook for their own finances, and are maintaining a relatively cautious attitude to spending," said Mr Gordon.
Nationally, economic confidence declined in most parts of New Zealand in the quarter. Southland has taken the mantle of the most optimistic region in the country, bolstered by the improved outlook for dairy sector incomes. Meanwhile, Aucklanders were the least optimistic about their region's economic prospects.
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Economic confidence
-Measured by subtracting the percentage of the region's residents who believe their region will experience bad economic times over the coming year, from the percentage who believe the region will experience good economic times.