Region less glum about economy

Retail spending in Northland is down as a survey shows that Northlanders are less pessimistic about the NZ economy. Photo / File

A survey has revealed that Northlanders are feeling less pessimistic about their region's economic prospects, thanks in part to a lift in house sales and tourist spending.

The latest Westpac McDermott Miller Regional Economic Confidence survey showed that the proportion of households expecting good economic times in the Northland region over the year went from -17 per cent in March to a net -12 per cent in June.

The national average was for a net 10 per cent to expect good times ahead for their region.

Westpac Senior Economist Michael Gordon said key industries for the region such as forestry and dairying were still face challenging conditions in international markets.

However, he said: "The Northland economy has been on an improving trend over the last year, with strong employment growth, rising house sales and a lift in tourist spending".

Mr Gordon said the March quarter survey was characterised by relief that the dry summer had proved to be less damaging to the farming sector than initially feared.

"However, that brief respite has now given way to the reality of a second season of low dairy prices. Fonterra has lowered its farmgate milk price for last season to an eight-year low of $4.40 per kilo of milksolids, and its opening forecast of $5.25/kg for this season is also well below the average of recent years."

Meanwhile, the Westpac McDermott Miller Consumer Confidence Index showed Northland consumer confidence fell from 118.2 in March to 106.8 in June, taking it below the national average of 113.0.

That index summarises responses to questions about households own financial situation, their expectations for the New Zealand economy as a whole, and their current willingness to buy a major household item.

Consumer confidence fell in eight out of 11 regions in the June quarter.

"Despite the improved perception of their own region's economic prospects, Northland consumers are much more downbeat on prospects for the wider economy over the next year, and are less inclined to buy major household items," said Mr Gordon. "This will not come as welcome news to local retailers."

Greg Harford, spokesperson for Retail NZ said the most recent statistics for Northland, for the quarter ended March 2015, showed that retail spending in the region was down 5.2 per cent compared to 2014.

"We are hearing anecdotally that it's pretty tough out there for many retailers."

He said a reduction in spend in Northland was at odds with the most of the rest of the country, which recorded a 5.1 per cent average increase in retail spending over the same period. "While there could be some sampling issues, it does seem that Northland retail isn't doing as well as the rest of the country."