Pessimism about economy spreads to ‘all parts’ of New Zealand as cost of living rises

According to a new study, household confidence in the regional economy is “at its lowest”.

Northland consumer confidence was down to -32%.

The Westpac McDermott Miller Consumer Confidence Survey shows that all regions are feeling the effects of tough economic conditions.

The rising cost of living is believed to be driving pessimism in regional economies.

Westpac economist Nathan Penny said the picture was grim.

“The fact that all regions are in pessimistic territory is quite telling and I don’t think we’ve ever seen that in history.

“It’s an indication of some key factors that are impacting everyone in all regions.”

Auckland saw the biggest drop in the survey, plunging to -37%.

Northland is just behind at -32%, which Penny partially attributed to Covid-19 constraints.

“They have struggled with meat processing capacity issues, with many workers taking time off due to Omicron.

“It meant it was really difficult for farmers to send their stock to meat processing plants and it caused a lot of problems for farmers during what is normally the peak period.”

Penny said seasonal elements such as droughts have affected many areas.

However, he believed there would be a rebound in the provinces.

“This is based on the fact that our agriculture, our horticulture and our viticulture – are doing very well.

“This should support revenues in these regions relative to urban centres, particularly Wellington and Auckland, which we expect to underperform.”

The Nelson area dipped further into negative territory in the June quarter, now sitting at -12%.

This is despite the region’s housing market holding up better than most.

However, Nelson Chamber of Commerce chief executive Ali Boswijk said the results were not surprising.

“We are a region of exporters and we know that exporting is still very difficult and supply chains are still very disrupted and costs are going up quite significantly with that.

“We also know that we’re in a place where there’s a lot of construction going on and there’s a lot of cost escalation related to almost every aspect of that right now.”

However, Boswijk shared Penny’s sentiment – international and domestic tourists would be the country’s saving grace.

Otago was the least pessimistic region and saw the strongest improvement in the quarter, supported by the return of tourism.

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