There's a brighter future for many as the economic clouds over New Zealand are starting to lift, Kiwibank's latest report says. Photo: Pablo Heimplatz / Unsplash
Most of the country is starting to recover economically, even if it doesn't feel like it, Kiwibank says.
It has released its latest annual regional report, which it described as "tentatively optimistic" about what lies ahead for the country's economy.
Every region increased its economic score compared to last year - with the exception of Wellington - although the highest score remains only five out of 10, recorded in Southland.
"We're not shooting the lights out by any stretch of the imagination," said Kiwibank chief economist Jarrod Kerr.
"What we're really feeling is that things are slightly better than last year but still at recessionary levels. There are places where people are in pain, they're hurting…
"The message we're saying is 'look to next year. Next year is going to be a better year than this'."
He said that message was well received by many people.
"You can see they've got their heads down at the moment, putting out fires. But the thought that interest rates are going to be cut and things will turn around next year, you can just see their eyes light up. We're talking ourselves deeper into this recession and I think we'll spend the next six months talking ourselves out of it again."
Most of the country, including Auckland, scored three out of ten. Gisborne, Taranaki, Canterbury and Otago scored four. Southland recorded a five and Wellington just two.
Kerr said Wellington had the same score as last year.
"Last year it was miserable and it's still miserable. There is a lot of disruption in Wellington, particularly around the public service and job losses there. People are feeling that even if they're not directly impacted by it."
Kerr said tax cuts were unlikely to make a difference to struggling retailers and hospitality businesses.
But he said income growth should outpace inflation from now on, which would gradually help improve households' cash flow and when interest rates fell in earnest it could help encourage spending.
"Retailers are doing it tough. They're telling us they're having to discount massively just to get people in the door. People who do come in the door aren't buying a lot, maybe one item versus three a year ago."
More people were worried about job security, he said.
"A year ago the labour market was super tight and you could get another job if you wanted, you heard about people leaving jobs and going to similar jobs for an extra 20 percent… now we've had a flood of migrants come in and we're hearing anecdotes that per job people are getting 40, 50, 60 applicants."
He said it was notable that Southland had increased construction activity by 46 percent, at odds with the rest of the country.
"They're addressing the shortage down there which is great to see. We want the whole country to do that."
