Region hits 10-year high in latest Westpac McDermott Miller survey

By David Porter -
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Confidence: Top ranking no surprise given region's growth, says Priority One's Nigel Tutt. Photo/File
Confidence: Top ranking no surprise given region's growth, says Priority One's Nigel Tutt. Photo/File

Confidence in the Bay of Plenty's economy surged to a 10-year high in December as the region recovered its place on top of the national leader board, a slot it has held for six of the past seven quarters.

A net 50 per cent of households expect the region's economy to strengthen over the coming year, according to the Westpac McDermott Miller Regional Economic Confidence survey, released Tuesday.

That was up from 34 per cent the previous quarter, when the Bay of Plenty briefly relinquished the top spot to Wellington.

Meanwhile, the Auckland region slipped to bottom in regional confidence, for the first time since 2009, with 13 per cent.

"Bay of Plenty residents have become increasingly upbeat about the region's economic prospects," said Westpac acting chief economist Michael Gordon.

"The Bay of Plenty has a lot going for it, so high levels of optimism are not surprising. Tourism is booming, strong population growth is driving growth in construction and house prices, and the horticulture sector continues to strengthen."

The latest result was no surprise given the strong growth in the region, said Nigel Tutt, chief executive of Tauranga economic development agency Priority One.

"In particular, we're seeing really strong business growth and job growth. And of course we see that filtering through to the overall public as increasing confidence in the region's prospects."

Michelle Templer, chief executive of Destination Rotorua said the survey reflected what was being seen in Rotorua, with new ventures such as the Motion Entertainment facility, the Tree Walk night lights experience and Social Room Café at the Blue Baths.

"We are also seeing increased reinvestment by companies such as Red Stag Timber and new and refurbished commercial property coming onto the market," she said. "I am looking forward to the Bay of Plenty's confidence in the economy encouraging more people to seriously consider starting up or locating their businesses in the region."

Separately, the survey also examines consumers' views on their own economic situation, producing an index that summarises responses to questions, including their current willingness to buy a major household item.

The regional breakdown showed Bay of Plenty consumer confidence was up, rising from 107 in September to 115 in December. This was slightly above the nationwide average of 113.

"The overwhelming positivity the region's residents have shown toward the region's prospects hasn't translated into quite the same exuberance at the household level," said Mr Gordon.

"While households are feeling more upbeat about their own financial position, they maintain a relatively cautious attitude to spending. A net 12 per cent of households think now is a good time to buy a big-ticket household item, one of the country's lowest readings."

Regional economic confidence rose sharply in most parts of New Zealand in the final quarter of 2016. The notable exceptions were Wellington and Canterbury, the regions most affected by the earthquakes in mid-November.

In other parts of the country, regional confidence has continued to track higher, reflecting the increasingly broad-based drivers of New Zealand's commendable growth performance, says the Westpac analysis.

"Strong economic activity is generating jobs and encouraging more people into the labour force, surging dairy prices have underpinned improved confidence in the outlook for rural regions, and construction activity is broadening beyond just Auckland and Canterbury. All this means many parts of the country are feeling more upbeat about their local prospects than they have in some time."

Regional economic confidence December Quarter - top 5

- Bay of Plenty 50%
- Taranaki/Manawatu/Whanganui 44%
- Gisborne/Hawke's Bay 41.7%
- Waikato 41%
- Southland 40%

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