News

12 January 2016

Economic confidence recovering in rural Southland

The Southland Times

Rural Southlanders’ confidence is recovering after being in a pessimistic position three months ago, but residents are still not splashing out on big-ticket items.

Westpac’s McDermott Miller Regional Economic Confidence survey for December showed 16 per cent of respondents from Southland expected the next 12 months to be better for the region’s economy.

In September, 36 per cent of respondents believed it would worsen.

The survey was conducted between December 1-11with a total sample size of 1565 across New Zealand.

Westpac industry economist David Norman said the September result reflected the exposure Southland has to dairy, when the dairy payout forecast from Fonterra was exceptionally low.

However, Fonterra revised its $3.85 forecast to $4.60 later in September.

“With a limited recovery in the payout forecast, farmers are feeling more positive in the region,” Norman said.

But economic confidence in the farming industry had not completely recovered.

A good indication of farm confidence was tractor sales, which were down 22 per cent in Southland in the three months to November, compared to the same period last year, Norman said.

“So there is still a lot of caution being displayed on-farm.”

Southland Chamber of Commerce acting general manager Miriam Erikson believed economic confidence was definitely on the rise in the south.

“Theres so many positive things happening in the region.

“I think 2016 is shaping up to be really forward.”

Erikson said there were many industries flying under the radar in Southland which were having a good impact on the region’s economy.

Venture Southland chief executive Paul Casson said the survey concentrated on households, and did not give a clear indication of what was happening in Southland’s economy.

“If you look at tourism, that’s just rocketing away.”

Casson could not predict what would happen for Southland’s economy in 2016.

“It’s a bit of a waiting game at this stage.”

Norman said that while on-farm spending had been cautious, Southland tourist guest nights were rising and electronic card sales had been strong.

While Southlanders felt confident about future prospects, the survey suggested consumer confidence was low.

“This result shows that although people are a lot more positive about their own outlook and that of the region than they were three months ago, they still remain cautious overall,” Norman said.

Only 2 per cent of Southland respondents thought now was a good time to buy expensive household items, which suggested households were not getting carried away despite a slight relief in the dairy forecast, he said.

The dairy payout had a huge effect on spending in Waikato, Taranaki and Southland which relied heavily on dairying, he said.

“This is still not a good payout, people are going to be more cautious.”

There are about 64 dairy farms listed online for sale in Southland, with many on the market for more than a year.

Norman expected there would be few expensive transactions made in the region until confidence in the dairy industry rose.

“We expect that there we’ll probably see very modest vehicle and house sales in the region over the next few months.”

While the survey indicates consumer confidence remaining low comparably to the rest of the country, Southland’s December spending growth was amongst the highest nationwide.

Paymark’s initial December data shows spending was up 9 per cent on last December on all cards, with $121.8m in total transactions for the month.

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