Canterbury confidence rallies as rest of NZ falls in 2Q

Monday 25th June 2012

New Zealand regional economic confidence fell in the second quarter, except in Canterbury, where optimism rallied to pre-earthquake levels.

The Westpac McDermott Miller Regional Economic Confidence Survey fell 7 points to negative 4 in the three months ended June. The biggest decline was in the Waikato with confidence tumbling 28 points to minus 6 and Otago down 13 points to a negative rating of 22.

Thanks to the Christchurch rebuild, households in Canterbury remained upbeat about the local economy, with confidence rising 17 points to a positive reading 25 on the long-running index.

At a negative rating of 33, Northland was the gloomiest region, although slightly less so than in the first three months of the year, when it rated minus 35.

"Confidence in Canterbury has seen a major rebound from three months ago and is now the highest since February 2011 earthquake," said Felix Delbruck, senior economist. "While parts of the economy continue to struggle, repair and reconstruction work is underway, the market for non-damaged homes has continued to pick up, and retail spending is almost back at pre-quake levels."

Public sector cutbacks continue to have an influence on the capital's confidence, falling a further 6 points to minus 24, making it the second most pessimistic region after Northland.

"Households in the region haven't been this downbeat about prospects for their local economy since the early 1990's recession - not too surprisingly in view of public sector cutbacks and another tight government budget," Delbruck said.

Confidence in New Zealand's biggest city, Auckland slipped 11 points to a negative 4 rating.

Westpac's regional survey comes a week after its national consumer confidence survey fell 2.5 points to 99.9 in the three months ending June, as people remain content about the present, but increasingly gloomy about the future. A rating of 100 in the consumer index indicates sentiment is evenly balanced.

BusinessDesk.co.nz

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