Otago's regional economic confidence fell sharply in the three months ended March 16, a larger drop than expected because it is one of the regions where dairying is not as prominent as in its Southland neighbour.
Regional confidence in Otago fell from 36.6% in December to 11.9% in March, a fall of more than 67% in percentage terms. The Westpac McDermott Miller confidence survey indicated the fall was 24.7%, the straight subtraction of the two numbers.
Southland had an even larger fall, moving from 16 in December to -22 in March. Westpac industry economist David Norman said sentiment had fallen across 10 of the 11 regions since the December survey.
Dairying regions had been hit hard at recent dairy auctions. Those held between September and early December were followed by several weaker ones.
Westpac's forecast for the current season was $4 per kilogram of milk solids, with $4.60 forecast for next season, still well below the break-even point for many farmers, he said.
‘‘This downturn in sentiment was expected but was perhaps a little larger than expected in regions where dairy is not as prominent, such as Otago, Northland or even the Bay of Plenty.''
Some of the variation might be explained by wider margins of error, especially for smaller regions. But there was little doubt people's views of their region's performance was mostly weaker, Mr Norman said.
The Bay of Plenty region once again had the most positive outlook, followed by Gisborne and Hawkes Bay and the top of the South Island.
In Otago, a net 12% of respondents were optimistic about the region's economic outlook, down from a net 36% feeling positive in December.
Mr Norman said Otago residents were positive overall about the regional economic outlook. Dairying woes were hitting other parts of the South Island, like neighbouring Southland, particularly hard. But Otago was not as exposed.
At the same time, there was a lot of good news out of the region, he said.
Tourism was enjoying an unprecedented boom in the Queenstown-Wanaka area. Stronger population growth was leading to solid rises in house prices, which typically made people feel more positive about the region's outlook. Building work was on the rise, which was creating new jobs in the region.
In Southland, regional confidence plunged in March. A net 22% of respondents were pessimistic about the region's economic outlook, down from a net 16% feeling positive in December.
The result was largely unsurprising, Mr Norman said.
‘‘After a short period of better dairy auction prices bringing some positivity into residents' minds leading into the December survey, those gains have been reversed.''
Once again, dairy prices were languishing and the revised payout forecast was weighing on the minds of people in the South, he said.
Southlanders were almost four times more likely to work in the dairy industry than New Zealanders overall and the impact went beyond the farm gate to industries and businesses supporting agriculture, he said.
Otago fared much better in the consumer confidence index which summarised responses to questions about the financial situation of households, their expectations for the New Zealand economy as a whole and their current willingness to buy a major item.
Consumer confidence fell in Otago from 113.4 in December to 100.6 in March, still above the crucial 100 mark which indicates more positive responses than negative. Confidence fell the most in Otago (12.8 points) despite a booming tourism and construction sector in the region.
Southland slipped to 98.6, the only region to be below 100 in March.
