The latest Westpac-McDermott Miller regional economic confidence survey for the June 2019 quarter found Otago household confidence levels had risen from 40% in the previous quarter to 45%, as seven of the 11 regions booked confidence declines, Westpac chief economist Dominick Stephens said.
The reason for Otago's slightly better outlook was likely to be seen in a big pickup in construction activity, conducive conditions in the agricultural and horticultural sectors and low unemployment levels, he said.
"Households in this region are the most confident in the country despite an apparent recent cooling of economic activity, as evidenced by a slowdown in house-price growth and tourism activity," Mr Stephens said.
Regional economic confidence had deteriorated for the second consecutive quarter. Despite that, Mr Stephens said households in regions with a large rural backbone continued to be more confident about the future than their metropolitan counterparts. However, the gap in confidence levels was beginning to narrow as fast-growing agricultural-based regional economies started to slow and conditions in major metropolitan centres began to improve.
Recent economic outperformers such as the Bay of Plenty, Gisborne/Hawke's Bay and Wellington experienced the sharpest falls in confidence, he said.
"Confidence also fell in major dairy-producing regions, like the Waikato and Southland," Mr Stephens said.
Southland confidence fell to 27% in the June quarter, from 36% in the previous quarter.
"Despite a higher dairy payout forecast, confidence among dairy farmers in the region remains low because of concerns about having to comply with environmental regulations and worries about stalling dairy farm prices," Mr Stephens said.
Southlanders have traditionally been among the most confident in the country and that remains the case; the province is in the top four areas with the highest confidence levels.
"The regional economy had generally been doing well, although recently things seem to have plateaued," Mr Stephens said.
While house prices were still rising, the construction and tourism sectors had slowed.
