New Zealand's regional economic confidence rose marginally in the quarter ending June, with only six of the country's 11 regions showing an improvement over the previous quarter, as pessimism in Auckland grew and optimism cooled in three key dairy and oil exploration regions, according to the latest Westpac-McDermott Miller survey.
Households in Auckland are easily the most pessimistic in the country; indeed, pessimists in the region have outnumbered optimists in two of the last three quarters, Westpac industry economist Paul Clark said in the report.
"This gloomy outlook is largely due to slowing house prices, high levels of indebtedness and concerns about what government policy might mean for the housing market going forward," said Clark, pointing to a potential capital gains tax as well as the pending introduction of a regional fuel tax.
Meanwhile, the number of households expecting economic conditions to improve fell significantly in three regions, those of Waikato and Southland as well as the Taranaki/Manawatu-Whanganui area, the survey showed.
In the latter region, confidence is likely to have been shaken by the government’s announcement that it will stop issuing permits for offshore oil and gas exploration in the region, Clark noted.
He also pointed to the potential closure of New Plymouth’s Yarrow stadium because of its earthquake risk as well as reports that the Mycoplasma bovis cattle disease has been found in the southern Manawatu, although it has yet to spread to Taranaki.
"That said, high dairy and crude oil prices will have given some cause for cheer, as will the rate of unemployment, which despite being above the national average, remains relatively stable," according to Clark.
On the bright side, households in the Nelson/Marlborough/West Coast region and the Bay of Plenty region are the most optimistic about the future.
Household confidence in Nelson/Marlborough/West Coast's economic prospects climbed to 47 percent in the June quarter, up from 13 percent in the March quarter.
The jump, which makes it the nation's most confident region, reflects a recovery in activity levels after a number of severe weather events earlier in the year had left a trail of destruction, washing out roads and bridges and damaging horticultural and forestry businesses, according to the report.
"The top of the South Island continues to see strong population growth, relatively big house price gains, and favourable operating conditions in the wine and horticultural sectors," Clark said. "At the same time, unemployment continues to track below the national average."