Westpac Regional Round Up, October 2025

Our Regional Roundup report summarises feedback that Westpac’s teams across the country have heard from households and businesses, giving an ‘on the ground’ view of the conditions that different regions are experiencing.

Early signs of a thaw in the economic winter.

It’s been a long hard winter for the economy. Speaking to businesses around the country, many have told us that they’re continuing to experience soft trading conditions, especially those in the retail and construction sectors.

However, while conditions remain challenging, businesses have told us that they aren’t going backwards like they did over the past year. And in some parts of the country, we’re seeing early signs that those wintery conditions are starting to thaw, with several businesses reporting signs of a modest lift in demand, albeit from a low base.

Town and country – the stars are (still) brighter in the south.

Looking across the country, it’s still a very mixed picture. Rural regions, especially those in the south with large dairy sectors, are seeing firmer conditions than elsewhere. Strength in the prices for commodity exports is boosting earnings in the agricultural sector, and that’s passing through to increased spending in related industries.

Otago, including the Queenstown-Lakes district, has been the star performer for the economy. Conditions in the region have been buoyed by both the firmness in the agricultural sector, as well as increases in international tourist spending.

In contrast, the economic climate remains cooler in urban regions, like Wellington. Ongoing pressure on household finances and related low levels of confidence are continuing to weigh on spending.

Labour market in a holding pattern.

With economic conditions stabilising in recent months, far fewer firms told us that they have been shedding staff than was the case earlier in the year. However, at this stage, businesses are still reluctant to take on new staff, with several commenting that they’re waiting to see how the economy performs.

Among the relatively low number of businesses that have been looking for staff, many told us that it’s been much easier to find better qualified candidates. Notably, we’re not hearing any comments about pressure on wages (other than what we normally see for highly specialised roles).

A moderation in cost pressures (but they haven’t gone away).

On the inflation front, a number of businesses continued to report pressure on operating costs and margins. Several also highlighted large increases in fixed costs, like rates and insurance.

However, in contrast to the past few years, those comments about upwards pressure on operating costs have become much less prevalent, as have comments about margin squeeze.

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