Economic confidence in the Bay of Plenty has fallen through the floor, according the Westpac Regional Economic Confidence survey results released today.
The survey conducted in December last year, shows only 13 per cent of Bay of Plenty households expected their region's economy to improve over the next 12 months.
It's a significant drop in confidence from the September quarter when the Westpac-McDermott Miller Regional Economic Confidence survey found 37 per cent of Bay of Plenty households expected an economic improvement.
“In part, this is likely to be related to the cooling in the housing market. We've also seen a recent softening in dairy prices, as well as a growing sense of unease over the possible impact of government policy on the agricultural sector,” says Westpac Chief Economist Dominick Stephens.
“Confidence in the Bay of Plenty has fallen sharply over the past quarter.”
This is a significant drop for a region that over the past few years has been among the most optimistic in the country.
Higher kiwifruit and avocado prices, together with stronger construction activity, will have supported confidence in the region, says Dominick.
Unease over government policy and the impact that this might have on agriculture should also be added to the mix.
Separately, the Westpac-McDermott Miller survey also examines consumers' views on their own economic situation, producing an index that summarises responses to questions including how respondents view their own financial situation and how they see the economy in general performing.
The confidence Index for the Bay of Plenty fell to 105 in the December quarter, from 112 in the previous quarter.
“As was the case in the previous quarter, households in the Bay of Plenty are not particularly optimistic about the prospects for the New Zealand economy and very few think that their own financial circumstances will improve over the next 12 months,” says Dominick.
“As a result, households in the region remain cautious about spending with fewer willing to purchase large household items.”
The survey was conducted over the period December 1-10, 2017.
Nationally consumer confidence fell across nine of the eleven regions.
Confidence is rising in the Waikato, Gisborne/Hawke's Bay, Wellington, Nelson/Marlborough/West Coast and Otago.
The Bay of Plenty's loss of economic confidence is the third biggest drop behind Canterbury and Auckland, but ahead of Southland and Taranaki/Manawatu/-Whanganui.