Confidence in Bay of Plenty's economy has nosedived in the last three months. Other than feeling the cold and a slowdown in the property market, local business leaders can't quite put their finger on why economic confidence in the region has taken such a plunge. Bay of Plenty Times business
Bay's confidence in region's economy plummets, business experts ask why
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A new survey found only 19 per cent of Bay households expected their region's economy to improve in the next year. Photo / File
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Despite the numbers, Westpac chief economist Dominick Stephens said economic activity in the region had been "running hot".
"The region continues to benefit from favourable conditions for kiwifruit and forestry, still firm construction activity, and a strong labour market," he said.
"That said, there are signs that momentum could be slowing, house prices, for example, have slowed markedly in recent months and this is likely to be weighing heavily on households in the region."
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General manager of Tremains Bay of Plenty and Waikato, Anton Jones, said the market had been a "bit fickle" in the last few months coming into winter.
Jones said two long weekends and the school holidays that fell in April this year had a significant impact on the property market.
"Things have certainly cooled in the market," he said. "It is not as easy to sell your house as it was a year ago."
Priority One chief executive Nigel Tutt said the survey did not reflect what was happening in the region.
"Consumer spending, commercial building consents, commercial vehicle registrations and GDP are all experiencing strong growth," he said.
Tauranga Chamber of Commerce chief executive Matt Cowley said businesses with low confidence were most affected by legislative changes to managing staff.
"Changes such as increasing minimum wage, domestic violence leave, payroll, 90-day trial period, and the on-going skilled labour shortage have recently hit businesses hard all at once... and it has dented the confidence of a range of business owners and managers," he said.
Tauranga mayor Greg Brownless said suggested people may have wanted more from the Budget.
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Western Bay of Plenty mayor Garry Webber said a quarter by quarter data comparison was not an accurate reflection on a trend and there was nothing to be concerned about.
"The growth in the Bay is incredibly positive... kiwifruit is doing well, people are still building houses, new businesses are coming here," he said. "It seems to just be a temporary blip."
Te Puke Economic Development Group chief executive Mark Boyle said the economy was "buoyant" particularly in the kiwifruit sector.
Hospitality New Zealand Bay of Plenty regional manager Alan Sciascia said the region's economy was seasonal, especially in hospitality.
Sciascia said an influx of domestic and international tourists visited the region and spent money at local businesses during summer.
"More people are employed in the summer than in the winter," he said.
It was the opposite during winter when there were fewer customers, less income and fewer people employed, he said.
"Consequently it comes as no surprise to me that consumer confidence has taken a dip."
Rotorua Chamber of Commerce acting chief executive Bryce Heard said there was no evidence of a drop in economic confidence in Rotorua.
"People are still investing in a lot of renovations and reconstructions around the city," he said. "It is still very busy, places like Eat Street are humming."
Rotorua mayor Steve Chadwick said confidence remained positive overall and the local property market was still booming.
"We are seeing a number of new builds and significant developments, including the construction of the Pullman Hotel, the new building development on Fenton and Pukaki streets and development at Rainbow Springs," she said.
Household economic confidence ranked by region
(June 2019 quarter compared to March 2019 quarter):
Bay of Plenty: 19 per cent, down by 30 per cent
Gisborne/Hawke's Bay: 26 per cent, down by 21 per cent
Auckland: 3 per cent, up by 13 per cent
Northland: 9 per cent, down by 11 per cent
Southland: 27 per cent, down by 9 per cent
Waikato: 29 per cent, down by 5 per cent
Canterbury: 15 per cent, down by 3 per cent
Otago: 45 per cent, up by 5 per cent
Nelson/Marlborough/West Coast: 30 per cent, up by 5 per cent
Taranaki/Manawatu-Whanganui: 19 per cent, up by 9 per cent
Source: Westpac-McDermott Miller Regional Economic Confidence Survey
