Heartland gains confidence as farm outlook improves
CONFIDENCE in New Zealand’s heartland is bouncing back, after rural regions braced themselves for tough times late last year.
But confidence remains mixed in the main centres despite much cheaper fuel prices than six months ago, falling fixed term mortgage rates and rising house prices.
Overall, the Westpac McDermott Miller regional confidence survey was up 3 points to 21 in March.
The strongest gains in confidence were in Southland, up 32 points to 29, with Bay of Plenty up 18 and Waikato gaining 14 points.
The survey index is the percentage balance of households expecting good rather than bad times in their region in the year ahead.
Regional confidence rose overall in the March quarter, clawing back some of the ground lost in December, Westpac said.
Rural areas and smaller centres saw the best gains, while confidence in the main centres was mixed, which was puzzling given cheaper petrol and lower mortgage rates in the past six months.
Confidence dipped slightly in Auckland, gained a few points in Wellington and was up just 1 point but at still extremely high levels in Canterbury.
Confidence in the main centres remains above average, especially in Canterbury at a net 48 per cent positive, with the earthquake rebuild continuing to create jobs and boost incomes. Unemployment is low and consumer spending is strong in Canterbury. However the drought had hit South Canterbury hard and milk prices had also fallen sharply hurting the dairying sector.
Wellington confidence was at 23 points, one of just a couple of regions to see a lift in confidence compared with a year ago.
Unemployment in Wellington is down to a four-year low, house National confidence is up 3 points to 21 in the March quarter Regional changes: Auckland: 21 points, down 3 Wellington: 23 points, up 4 Canterbury: 48 points, up 1 Southland: 29 points, up 32 Waikato: 13 points, up 14 Gisborne/Hawke’s Bay: 2 points, up2 Taranaki/Manawatu/ Whanganui: 13 points, up 3 prices are rising gradually and tourism has been strong for the city.
And despite government belttightening, the public sector was an ‘‘above-average’’ contributor to GDP growth in the city, Westpac said.
Late last year, confidence in farming regions was knocked back when Fonterra’s payout was expected to be under $5 a kg compared with the record season. And drought looming late last year.
But since then there has been some rebound in dairy prices, pointing to better returns next season.
Extremely high beef prices in the United States had also given farmers a boost.
And while the drought has been bad in some regions, it has not been as severe as some past years.
Some parts of the South Island remain extremely dry, but the upper North Island looks better than a year ago.
While confidence in Southland bounced back strong, the 32-point gain was not quite enough to undo the plunge in the December quarter, Westpac said.
Unlike other key dairying regions, drought had not been a significant threat for Southland, which may help explain the rebound in confidence, Westpac said. $8.40 was last also