A net 28 per cent Bay households expect the region's economy to improve in the next 12 months. Photo / File
There seems to be a lot for Bay of Plenty residents to smile about when it comes to the future of the region's economy. Business reporter Zoe Hunter looks into the latest findings from the Westpac-McDermott Miller Regional Economic Confidence survey.
The Bay of Plenty is the most optimistic region in the country in terms of economic confidence, a new report has revealed.
The latest Westpac-McDermott Miller Regional Economic Confidence survey showed a net 28 per cent Bay households expected the region's economy to improve in the next year - with the region topping the charts - beating Gisborne and Hawke's Bay.
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The December quarter results showed a big jump in optimism, with three times as many people positive about the region's economic future than in the previous quarter.
Tauranga leaders flagged a successful kiwifruit season, low-interest rates, rising house prices and a lift in construction activity as the reasons for the confidence boost, which they expect to continue into 2020.
Priority One chief executive Nigel Tutt said confidence surveys were expected to fluctuate.
"As this is a household survey, I'd expect results to be influenced by house prices, which have been strong in our area," he said.
"In general, things are buoyant in the Bay, and we'd expect continued confidence over the next year."
Tauranga Chamber of Commerce chief executive Matt Cowley said the region had benefited from strong population growth, increased public sector wages and steady conditions for export companies last year.
"The stormy clouds from Brexit, US-China trade wars and the capital gains tax appear to have passed," he said.
Cowley said local investment in retail precincts across the city had also boosted residents' confidence.
"Everyone is looking forward to local and central government investment in local infrastructure to help address the region's growing pains."
At the time of the survey, business owners were expecting a big holiday period to make up for slow winter trading, he said.
"It will be interesting to track business confidence over the year as more compliance is imposed on businesses, the minimum wage is increased, and businesses struggle to fill specialised roles.
"I believe business confidence and infrastructure investment will be key topics ahead of this year's general election."
Tauranga mayor Tenby Powell said the Western Bay of Plenty, in particular, had enjoyed strong economic and population growth over a number of years.
"Our kiwifruit industry has had a very good season and parts of the national economy which have had some challenges, such as the forestry and dairy industries, are not as integral to our economy as they are in many other areas," he said.
"Tauranga's port activities have also been buoyant and our wider business community is also performing relatively strongly."
Powell said lower interest rates were encouraging investment, which had flowed through to improved perceptions of future performance and increased construction activity across the residential and commercial sectors.
"A period of ongoing infrastructure and building investment can be anticipated for the medium term as we work with the central government to release funds for many much-needed projects in areas where Tauranga is lagging," he said.
Zespri chief grower and alliances officer David Courtney said the kiwifruit industry was a key part of the regional economy and its strong growth prospects into the future were hopefully feeding into the local economic confidence.
In 2018/19, this included direct payments from the kiwifruit industry of $210 million in Katikati, $250 million in Tauranga, $715 million in Te Puke, $86 million in Whakatane, $170 million in Opotiki and $25 million in Waihi, he said.
"We're looking forward to more success in the years ahead, and doing our part to contribute to the continued growth of the local Bay economy."
OneRoof editor Owen Vaughan said there was a lot of positivity in Tauranga's real estate market.
Vaughan said there had been steady value growth in the past year within the city, with "pockets" at both ends of the market performing extremely well.
"At the higher end, there is still a lot of demand for coastal beachfront property in areas such as Mount Maunganui. The bigger sales have been in the suburb and that is to do with location," he said.
"At the other end in the first home buyer market, there is a lot of demand for first home buyer stock really taking advantage of that low-interest rates environment."
Vaughan said suburbs with new and affordable stock have performed really well in terms of value growth.
"A lot of development in Tauranga central will attract more people to Tauranga and therefore there is going to be increased demand for housing and uptake in construction activity," he said.
Westpac chief economist Dominick Stephens said the sharp rise in confidence reflected the impact of a highly successful kiwifruit season.
"Lower interest rates, rising house prices and a lift in construction activity, particularly in Tauranga, are also likely to have improved the mood," he said.
"That said, relatively weak log prices in this major forestry region will still be a cause for concern, although the impact on harvesting has been minimal."
The survey was conducted over the period from December 1 to 10, 2019.
Bay of Plenty:
Dec 2019: 28%
Sept 2019: 9%
Change: 19%
Gisborne/Hawke's Bay:
Dec 2019: 27%
Sept 2019: 20%
Change: 7%
Canterbury:
Dec 2019: 18%
Sept 2019: -2%
Change: 20%
Wellington:
Dec 2019: 17%
Sept 2019: 3%
Change: 14%
Nelson/Marlborough/West Coast:
Dec 2019: 16%
Sept 2019: 15%
Change: 1%
Taranaki/Manawatu-Whanganui:
Dec 2019: 15%
Sept 2019: 11%
Change: 4%
Otago:
Dec 2019: 14%
Sept 2019: 10%
Change: 4%
Auckland:
Dec 2019: 14%
Sept 2019: -1%
Change: 15%
Waikato:
Dec 2019: 10%
Sept 2019: 11%
Change: -1%
Southland:
Dec 2019: 10%
Sept 2019: 19%
Change: -9%
Northland:
Dec 2019: 2%
Sept 2019: 2%
Change: 0%
Source: Westpac McDermott Miller
* Regional economic confidence reflects the difference between the percentage of
survey respondents that expect economic conditions in their region to improve and
those that expect prospects to worsen over the next 12 months. Sample sizes and
margins of error vary by region. The survey was conducted from December 1-10, 2019, with a total sample size of 1557.
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