MIL OSI – Source: BNZ Economist Tony Alexander – Analysis:
Our first quarterly BNZ Confidence Survey for 2016 has unsurprisingly shown that the dairying sector is extremely pessimistic and experiencing hard times while record optimism prevails in tourism where visitor numbers and spending are booming. The weakness in dairying is starting to spread out but construction around the country is very strong, regional housing markets are lifting, and in Auckland while real estate comments are highly mixed it is interesting to note some respondents observing more Chinese buyers recently.
Dairy Woe But Tourism & Construction Booms Underway
Our first quarterly survey for 2016 in which we ask Weekly Overview readers to comment on their sectors has produced some stark results. At the negative end understandably is the dairy sector with high pessimism and also some reduced confidence in sheep and beef. However in horticulture sentiment is very positive.
At the other end of the spectrum are regional housing markets now benefitting from Aucklanders seeking assets and locals jumping on this cyclical bandwagon, and tourism. Strong growth in visitor numbers and their spending has produced the most positive set of comments on tourism or potentially any sector that we have seen in the 11 year history of this survey. The construction and engineering sectors are also very buoyant and forestry positive. Retailing is also generally though not completely positive and with margins under pressure.
In the middle is the Auckland residential property market with a mixture of negative comments but also continuing listings shortages in some areas and one or two comments that Chinese buyers appear to be returning.
With regard to specific sectors the following broad comments can be made.
Lots of compliance work, tightening in rural areas.
Advertising and Marketing
Generally good activity. No indication of either fresh caution amongst clients or surge in spending.
Most obvious development is a lift in activity in the regions. Auckland as busy as ever, costs rising.
Very negative comments regarding dairying, sheep and beef less positive than before, venison good. Weakness in dairying is sharply affecting farm servicing companies.
Quite positive comments including for sawmilling.
Nothing but positive comments spread across kiwifruit, avocadoes, blueberries, flowers and vegetables.
Flat to good but with dairying weakness starting to come through for some.
Strong growth apparent but slowing in Christchurch.
Good tenant demand, rents rising typically less than 5% but one example of more, investors paying high prices to get stock.
Very busy but often with shortages of potential staff.
Residential Real Estate
Very strong outside Auckland and Christchurch. Some signs that Chinese buyers are returning to the market in Auckland but overall quite mixed comments for Auckland.
Margins squeezed but sales good overall.
Absolutely booming. Never before have we received such an abundance of positive tourism sector comments.