Source: Radio New Zealand
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It’s tough for shoppers buying meat and dairy at the checkout but strong dairy payouts and higher returns for sheep and beef farmers are fuelling the early days of economic recovery.
The latest look at the state of regional economies by consultancy Infometrics confirms the recovery is underway but is still patchy with South Island regions outpacing growth seen in their North Island counterparts in the September quarter.
Nationally, economic activity rose 0.9 percent in the quarter but has not yet returned to the level it was at this time last year.
Infometrics principal economist and lead demographer Nick Brunsdon says the growth story remains a tale of two islands with all South Island regions growing faster than the national average, boosted by the strength of the primary sector.
“Encouragingly, even metro areas are starting to recover, collectively gaining 0.7 percent per annum in the September quarter, although this recovery remains slower than provincial and rural areas,” he said.
“Fonterra continues to forecast a strong dairy payout midpoint of $10 per kg of milk solids and if this figure falls, as the latest Global Dairy Trade auctions imply, farmers would still wind up with the second-highest payout on record.
“Returns for beef and lamb have increased too – at the expense of consumers buying mince – but boosting returns for dry stock farmers.
“Kiwifruit and apple growers are also earning a higher return on elevated export volumes.”
The warming of regional economies has yet to translate through to an increase in spending, he said.
Households were carefully guarding their wallets with a backdrop of continued job losses.
“Businesses are going ‘cool, orders are up, but we’re not quite at the point where we need to hire more staff’ and so they’re generally going to hold off until that order book solidifies and they get the confidence that they actually do need to add to their roster.”
On the jobs front, five South Island regions saw growth in the number of filled roles during the quarter. The West Coast led the pack with 1.6 employment percent growth.
Nationally, employment went backwards, falling 0.6 percent, with metro areas even worse off with a 0.8 percent decline.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
