Dairy price rise boosts region's economic confidence

The rise of dairy prices has boosted the region's economic confidence. Photo / Christine Cornege

Economic confidence is on the rise in New Zealand, with the Whanganui-Manawatu-Taranaki region leading the way.

The latest Westpac survey - released yesterday - covered the final quarter of 2016 and showed a net 44 per cent of Whanganui-Manawatu-Taranaki households expected the regional economy to strengthen over the coming year.

Economic confidence rose sharply in most parts of New Zealand in the final quarter of last year, with the biggest improvement coming in Whanganui-Manawatu-Taranaki, jumping a "massive" 32 points from a previous net 12 per cent confidence rating.

The result was the strongest in three years, and resulted in the region jumping to second on the national rankings behind Tauranga after being a laggard for some time, according to the Westpac McDermott Miller regional survey.

"The sharp recovery in dairy prices through the second half of 2016 has reinvigorated residents' confidence in the region's economic prospects," said Westpac acting chief economist Michael Gordon.

He said Whanganui, Manawatu and Taranaki were prime dairy regions, "so the turnaround in regional confidence isn't surprising".

"We're now forecasting a milk price of $6.20 per kilogram for the current season, which would be well above break-even for most farmers, whereas just six months earlier, a third consecutive season of losses was on the cards."

The survey is conducted quarterly using five standard questions on personal financial circumstances, expectations for the economy and attitudes to buying substantial household items. The survey was conducted over the period December 1-10.

Regional economic confidence is 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. That gives this region the net 44 per cent positive rating.

Separately, the survey also demonstrates the regions consumers' views above the national average on their own economic situation improving.

Mr Gordon said the Whanganui-Manawatu-Taranaki region residents were the most upbeat about their financial positions they have been for a number of years.

"This is influencing spending plans with a net 20 per cent of the region's respondents thinking now is a good time to buy a big-ticket household item."