18 Aug 2011

High commodity prices boost rural economies

5:54 am on 18 August 2011

High commodity prices appear to be boosting economic activity in rural areas.

A regional trends survey by the National Bank, which can be considered a rough pointer to Gross Domestic Product, shows activity rose 0.8% in the three months to the end of June.

That follows a 0.1% contraction in March and 0.2% rise in the December quarter.

The survey shows the Canterbury region grew 1.9% from the previous quarter's 2.5% contraction.

Southland recorded the largest quarterly increase in activity, with a 2.1% rise, followed by Waikato with 2% growth.

National Bank economist Steve Edwards says there appears to be a turnaround in the rural regions.

He says the rural regions (which include all regions except Auckland, Wellington and Canterbury) had a 1.3% rise across those regions.

Mr Edwards says there was only a 0.4% rise in the urban regions of Auckland, Wellington and Canterbury.

He says commodity prices peaked in the June quarter and there's now a wait for the wealth in the rural sector to filter through to the wider economic community.

Bay of Plenty and West Coast recorded the strongest annual growth, at 1.9%, followed by Auckland and Otago at 1.5%.

Northland's economy recorded the lowest year-on-year change, dropping 1.2%.