Waikato economic confidence up and down

‘‘It’s a short-term win with the milk price rise, a pleasant surprise – I didn’t think we would get that.’’

Andrew McGiven Federated Farmers Waikato president

Waikato households are feeling more optimistic, with 24 per cent expecting the region’s economy to strengthen over the coming year.

The international sevens rugby tournament, strong construction activity, high employment and a rise in dairy prices may have reflected the economic confidence, Westpac chief economist Dominick Stephens said.

While 24 per cent is higher than the 18 per cent figure posted in the December 2017 quarter, there was a drop in consumer confidence this quarter in the Waikato.

The data comes from the March quarter Westpac-McDermott Miller Regional Economic Confidence survey and the Consumer Confidence Index.

Federated Farmers Waikato president Andrew McGiven said the recent announcement of a 15 cent lift in the milk price was a ‘‘pleasant surprise’’ and could have contributed to the economic confidence.

‘‘I think with our 15c extra forecast milk payment that’s pleased farmers because that’s essentially money in the pocket,’’ McGiven said.

‘‘I think when farmers open their monthly pay packet and see an extra 15 cents coming in that would please anyone, so that would surely bring some optimism.

He said where farmers are struggling, however, is with the Fonterra payout announcement.

‘‘The lack of value we’re getting in our dividends and our loss of capital value in our share price,’’ McGiven added.

Chief economist Stephens said the new Government’s policies may have impacted the dairy sector’s confidence in the December quarter. But with the Government now ‘‘firmly entrenched’’, those concerns were likely to have dissipated somewhat.

McGiven said farmers still have their concerns with the Government, but also Waikato Regional Council with the Long Term Plan, rates increase and healthy rivers legislation.

‘‘I don’t think it’s completely gone away, but the sky hasn’t fallen in with this new government. But we’re still probably unsure what’s down the track with us.

‘‘There’s going to be some legislative requirements that farmers will need to comply with too, but overall, it’s a short term win with the milk price rise, a pleasant surprise – I didn’t think we would get that.’’

With consumer confidence, the region fell to 107 this quarter compared to 111 in the previous quarter – one of only two regions to drop.

Stephens believes Waikato households think now is a good time to buy a big-ticket household item.

‘‘Households in the region are generally feeling worse off financially than they did a year ago,’’ he said. ‘‘However, they are more optimistic about the prospects for the New Zealand economy as a whole and expect to be financially better off this time next year.’’

The survey was conducted between March 1 to 15, 2018.