Auckland continued to lag, with activity up 1.3% per annum in the December quarter, but it was not too far behind the national average of 1.6% per annum, he said.
“The primary sector remains a bright spot, driving economic recovery for regional New Zealand,” said Brunsdon.
“The dairy payout has recently improved and is tracking just below last year’s record high, and milk solid production has increased 2.6% per annum.”
Prices were strong across the primary sector, with the value of New Zealand’s beef exports rising 21% over the 2025 calendar year and horticulture exports lifting 28%.”
The December 2025 quarter delivered increases in manufacturing sentiment, concrete volumes and construction intentions, tourism arrivals, job ads and more, but retail spending trends were mixed, inflationary pressures ramped up and hours worked pulled back a touch.
“While the job market remains challenging, households continue to scrimp with their money,” Brunsdon said.
Infometrics estimates consumer spending volumes fell 1.7% over the 2025 calendar year.
The housing market has started to pick up, with an 11% increase in sales over the year to December 2025. However, it remains a buyers’ market, with prices falling 0.9% per annum in the December 2025 quarter according to Infometrics’ analysis of Cotality data.
Employment gains remained more muted than economic activity, with only three South Island regions experiencing employment growth in the quarter.
Employment in Canterbury and Southland rose 0.6% per annum, and it was up 0.5% in Otago.
Urban areas, particularly in the north, continue to face employment declines, with Auckland’s employment down 0.9% per annum and Wellington’s falling 1.5%.
“Job momentum is still taking some time to turn around, and the unemployment rate has increased further, too. We expect employment will be one of the last indicators to recover,” Brunsdon said.
Earlier this week, BNZ chief economist Mike Jones released a report on regional economic progress, which also identified early signs of improvement in the North Island cities.
“The ongoing outperformance of the south – Otago and Canterbury in particular, but also Southland – continues to leap off the page,” Jones said.
But some convergence in regional economic performance was likely this year.
“The lagged impacts of lower interest rates and a slow turn in migration should assist the service, retail, housing, and construction sectors, thus allowing the cities to play a bit of catch-up,” he said.
“The key takeaway from our regional stocktake is that there are a few early signs of this convergence occurring, but it’s yet to happen to any significant degree.”
Activity in most parts was steadying.
“The recent uplift in construction, services and manufacturing activity is also looking more evenly spread. And Auckland and Waikato have notably nudged a few slots up the relative rankings.”
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter – your essential weekly round-up of all the business news you need.