Regional economic confidence in Bay of Plenty plunges

A net 13% of Bay households expect their region's economy to improve over the next year. Photo/file

Experts say a significant drop in economic confidence in the Bay of Plenty could be related to a cooling house market, softening of dairy prices and unease in the agricultural sector.

Results from the Westpac-McDermott Miller Regional Economic Confidence survey, released today, showed a net 13 per cent of Bay households expected their region's economy to improve in the next year.

Westpac chief economist Dominick Stephens said 13 per cent was a significant drop from the 37 per cent recorded for the September quarter.

"Confidence in the Bay of Plenty has fallen sharply over the past quarter," Stephens said.

"In part, this is likely to be related to the cooling in the housing market. We have also seen a recent softening in dairy prices, as well as a growing sense of unease over the possible impact of government policy on the agricultural sector."

The Westpac-McDermott Miller survey, which was conducted from December 1 to 10 last year, also examined consumers' views on their own economic situation.

The survey summarised responses to questions including how respondents view their own financial situation and how they see the economy in general performing.

The Westpac-McDermott Miller Consumer Confidence Index for the Bay of Plenty fell to 105 in the December quarter, from 112 in the previous quarter.

"As was the case in the previous quarter, households in the Bay of Plenty are not particularly optimistic about the prospects for the New Zealand economy and very few think that their own financial circumstances will improve over the next 12 months," Stephens said.

"As a result, households in the region remain cautious about spending with fewer willing to purchase large household items."