Households, businesses facing tough economic times

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A cold patch has settled over the economy, according to a survey by Westpac.

The bank’s latest round-up showed all regional economies frosty, cold or cool, with households and businesses describing conditions as tough.

Primary sector-dominated regions, such as Northland, the top of the South Island, Waikato and the West Coast are described as ‘frosty’ with the lowest rating, while Wellington shivers in the cold as it faces the reality of public sector job cuts.

No region scored the middle or higher ratings of mild, warm or hot.

Westpac senior economist Satish Ranchhod said the regions doing it the best were service-oriented, particularly tourist areas.

“At the same time, in many of our regions with strong agricultural backbones, the combination of dry conditions and weakness in export prices is weighing on farm earnings and spending.

“That’s flowing through to softer demand in regional economies more generally,” he said.

Services-oriented Auckland and Queenstown were amongst the brighter spots, but even there, it was not all positive news.

“Booming population growth is helping to support demand in the face of other headwinds. The recovery in international tourism is also providing a welcome boost to spending in the hospitality sector.

“That recovery in international tourist numbers has also been a boon for Otago, with many businesses in Queenstown reporting solid demand as the number of visitors from high-spending markets like the US continues to rise.

Conditions in the regions however had been mixed, Ranchhod said, with weaker spending by locals.