The Westpac McDermott Miller Regional Economic Confidence Survey showed decreased optimism across all regions except Gisborne/Hawke’s Bay in the first three months of 2016.
The survey balances households expecting good or bad economic times in their region over the coming year as a percentage of households in that region, with a positive number indicating more households have a good economic outlook. It was conducted from March 1 to March 11, and sampled 1,554 households.
The hardest-hit regions were those which are most exposed to dairy, which did not surprise Norman given the increasing negativity in the sector including Fonterra Cooperative Group cutting its forecast payout to dairy farmers by 25 cents to $3.90 a kilogram of milk solids on March 8.
Southland's mood dropped 38 percentage points to a net 22% of respondents negative about the region's economic outlook. Taranaki/Manawatu-Whanganui fell 31 points to net 22% negative, and Waikato lost 18 percentage points to net 14% negative.
However some regions with large amounts of dairying, such as Canterbury and Gisborne, did not see the same downturn.
“In a lot of regions you’d be surprised, because in many cases, meat and wool is still a bigger employer than dairy,” Norman said. “Dairy’s crucial in our export numbers, but in terms of employment and people’s immediate views on where their region’s heading, in many regions it’s still about meat and wool.”
Meat is New Zealand’s largest manufacturing industry, and second-largest merchandise exporter, according to trade body Meat Industry Association. The Ministry for Primary Industries said that in 2012 there were 73,122 people employed across red meat and wool, and MIA says there are now about 25,000 people employed by the red meat industry across 60 sites.
Horticulture also offset dairy’s lows, especially in Gisborne and Hawke’s Bay which remained the most positive region in the first quarter.
“The concern about El Nino decimating the region’s horticulture and meat and wool fortunes largely failed to become reality, and horticulture in particular has actually been really strong,” Norman said.
El Nino’s failure to appear also helped out horticulture and viticulture in Nelson, Tasman and Marlborough, Norman said.
