Economic consultancy company Infometrics’ "Quarterly Economic Monitor", released this week, showed despite falling interest rates, business conditions were difficult and unemployment was rising, limiting spending and investment by businesses and households.
The report said provincial and rural areas were feeling the pinch the hardest.
Infometrics principal economist Nick Brunsdon said yesterday Southland’s economy was pretty much following the national trend, which was "flat".
"If anything, it has been a little bit down. We estimate that Southland’s economy contracted by about 0.3% over the year to September, but there was a 0.1% gain in the September quarter.
"So essentially what that says is there was a little bit of a decline, but it looks like you’ve hit the bottom ... and it’s just ever so slightly starting to recover off that bottom."
The employment indicator, which was based on Stats NZ data, showed Southland’s employment rose 0.2% in the year to September, he said.
"There’s not a lot of money to go around, and so that affects businesses as well, and their willingness to hire people."
Mr Brunsdon said things could look a bit more positive in the next six to nine months as interest rates continued to fall. That would translate into lower mortgage rates, freeing up a bit of more money for people.
People would spend more, especially in the hospitality industry which had "borne the brunt of people closing their wallets".
While things were looking a bit better, the Christmas and summer period would still be tough.
"It will probably be the same as what we’ve had through the year, so I guess slightly down on last year’s Christmas.
"Another one is tourism. We’ve had a really strong kind of wave of support as international tourists have returned to the country, but that’s pretty well run out — both nationally and locally.
"We just started to see in the September quarter a little bit of a fall in guest nights, about an 8% fall in guest nights at commercial motels in Southland ... and that’s reflecting that international visitors aren’t growing at the same rate and domestic tourists aren’t travelling quite so much as well."
He noted that while most people had not lost their jobs, they were concerned and their financial behaviour was more reserved as they tried to "squirrel a little bit more money away for a rainy day".
