A divide between North Island South Island economies is emerging, with six of 11 regions' households losing confidence, according to Westpac chief economist Dominick Stephens.
Southland heads the list of optimists, gaining a huge 35% swing to 49% of households now expecting their regional economy to improve in coming years. Otago is close behind, rising 11% since the quarter to June to 42% more optimistic for the quarter to September.
Last week, in a separate ASB regional survey, Otago led the country, underpinned by job growth, overall guest nights, its tourism boom and a strong rural economy.
Mr Stephens said southern regions were the most confident, while those in the upper North Island were less confident.
Auckland's household confidence was ''extremely low'' and at the bottom of the country, a net 14% now expecting conditions to deteriorate over the coming year.
''This gloomy outlook reflects a lacklustre housing market, slowing net migration into the region, higher fuel prices and the recent implementation of a regional fuel tax,'' he said.
Otago Chamber of Commerce chief executive Dougal McGowan said the positive Westpac data for the South was largely underpinned by rising house prices and values, but also positive sentiment in the wider rural sector.
He highlighted lamb prices were up, forestry prices were again moving up, beef prices were stable and wool prices were gaining some traction, having been near record lows.
The region had experienced a relatively mild winter and Mr McGowan hoped this week's predicted weather and the remainder of spring would not turn too harsh.
He said while tourism numbers had risen for Central Otago, that was not reflected so strongly in hospitality or accommodation nights, possibly because of more AirBnB rentals and subsequent self-catering, and people spending less time in Queenstown accommodation.
Otago Southland Employers' Association chief executive Virginia Nicholls was not surprised Otago and Southland's regional economic confidence had increased and was so positive.
''This lines up with the feedback that we have been receiving from business in our region for some period of time,'' she said.
There had been increased investment in businesses, particularly construction and tourism and manufacturing was very busy in Southland, she said.
''The University of Otago and Polytechnics across the region are also reporting increasing student numbers,'' Mrs Nicholls said.
The Westpac data also aligned with recent BNZ BusinessNZ monthly performance of southern manufacturing and separate services index, which were both in expansion.
However, a theme of more than two years persisted in the South, and employers' concerns continued about access to skilled and unskilled staff, in numerous sectors, she said.
Westpac's Mr Stephens said Otago's upbeat mood partly reflected the impact of a buoyant housing market, whose price growth was among the strongest in country.
Booming business activity and record tourist numbers, combined with elevated prices for most primary products produced in the region, would also have added to an air of positivity, Mr Stephens said.
The 49% of optimists in Southland was the highest recorded since March 2014.
''The region is expected to continue to benefit from growth in meat and dairy exports, while elevated construction activity should ensure that the region is better able to meet an expected increase in tourists to the area,'' Mr Stephens said.
