Otago confidence slips

Dairying is expected to boost export-focused regions. Photo by Peter McIntosh.
Dairying is expected to boost export-focused regions. Photo by Peter McIntosh.
Otago regional economic confidence has taken a hit during the past quarter, in part related to public sector cost-saving austerity measures such as the loss of Hillside, NZ Post staff and Invermay scientists.

Of 11 regions identified, seven recorded a lift in confidence for the quarter to the end of September, and four a decline.

Otago had the second-greatest fall in confidence, from 12% to 3%, behind the combined Taranaki-Manawatu-Wanganui areas' fall from 33% to 21%.

Westpac senior economist Felix Delbruck said Otago and Wellington, down respectively to 3% and 4%, were ''subdued''.

''It's a reminder that public sector austerity continued to weigh on parts of the economy,'' Mr Delbruck said.

The regional confidence survey measures those expecting ''good'', as opposed to those expecting ''bad'', economic times in their area during the year ahead.

Nationally, regional economic confidence rose from 25% in the second quarter to 27% in the third quarter.

Mr Delbruck said despite signs of slowing growth in many developing countries, global food prices, especially in the dairy sector, had ''defied gravity'' during the past three months.

''Add better growing conditions and signs of a lift in tourism into the mix, and things are looking up for many export-focused regions,'' he said.

Economic confidence was now very strong in the Waikato and Southland, moderately positive in Taranaki-Manawatu-Wanganui, and trending up in the Bay of Plenty, Gisborne-Hawkes Bay and Nelson-Marlborough-West Coast, he said.

Southland's confidence rebounded strongly, gaining from 15% to 53%, and was now close behind top scorer Canterbury, up from 51% to 60%.

Soaring global dairy prices and a $30 million rescue deal from the Government for the Tiwai Point aluminium smelter are all likely to have boosted confidence.

He noted that the rescue package kept 3000 jobs, both direct and indirect, ''in place for now''.

Rising house prices might also be boosting economic confidence in many of New Zealand's smaller centres, which to date have not been seeing the gains registered in Auckland and Christchurch.

''Interestingly, confidence has dipped in Auckland, where the housing market is running rampant,'' Mr Delbruck said.

With the Christchurch recovery and rebuild well under way, he said Cantabrians' optimism for the region's economy ''continues to surge''.

''A net 60% of households now expect good times for the year ahead - up from 51% three months ago, and the most optimistic the region has been since 2005,'' Mr Delbruck said.

simon.hartley@odt.co.nz

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