Economic turnaround beginning for most regions

Economic recovery is getting underway across most of New Zealand’s regions, according to Infometrics’ latest monitoring of regional economies. Provisional estimates from the Infometrics September 2025 Quarterly Economic Monitor suggests that economic activity rose 0.9%pa in the September 2025 quarter, but remains down 0.5%pa over the 12 months to September 2025.

“The September 2025 quarter shows more meaningful economic gains across most regions, and the continued strength of the South Island” said Infometrics Principal Economist Nick Brunsdon. “All regions of the South Island are growing faster than the national average, boosted by better primary sector returns. Encouragingly, even metro areas are starting to recover, collectively gaining 0.7%pa in the September quarter, although this recovery remains slower than provincial and rural areas.”

“Strong primary sector returns are driving economic recovery for regional New Zealand,” said Mr Brunsdon. “Fonterra continues to forecast a strong dairy payout midpoint of $10/kgMS. Even 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.”

Construction sector activity remains challenged, with non-residential consent values down 1.9%pa over the year to September 2025, but there is some improvement for residential consents, up 3.6%pa – and some lift in professional services activity too.

Employment rose across five South Island regions this quarter, led by the West Coast, which grew 1.6%pa. However, employment declined 0.6%pa nationally, and especially in metro areas which fell 0.8%pa. “With job losses continuing, unemployment edged up to what we expect to be a peak, of 5.2% on average over the September 2025 year. We expect employment will be one of the last indicators to recover.”

“With a soft employment backdrop, households continue to play it safe with their money, even though households are refixing onto lower mortgage rates.” According to Marketview, consumer spending notched up just 0.6%pa in the September 2025 quarter, well behind consumer price inflation of 3.0%pa, indicating that households continue to buy less in real terms. The housing market has started to pick up with a 14% increase in sales over the year to September 2025, but buyers continue to focus on bargains, with house values barely rising, up just 0.2%pa in the September 2025 quarter according to Cotality.

ENDS

Attachment – map showing employment growth by region

Note:

The Infometrics Quarterly Economic Monitor is a series of reports about local economies, rather than one comprehensive report. This media release provides a high-level overview of trends and changes to regional economies.

More details about the Quarterly Economic Monitor can be found here: https://www.infometrics.co.nz/product/quarterly-economic-monitor