Tighter economic times are likely to persist for another year or so – but the effect won't necessarily be felt evenly across New Zealand, Infometrics says.

It's released its latest Quarterly Economic Monitor, which indicates that the economy might have grown 0.5 per cent in the September quarter, slower than earlier in the year, and bringing annual average growth back to 1.7 per cent.

It says growth in job numbers and population has helped the economy but high inflation and high interest rates have applied the brakes.

Chief executive Brad Olsen says subdued spending activity – data on Wednesday showed a significant drop – is being eroded by inflation.

He says it's the first annual drop in spending since July 2022, which is something of a psychological barrier to have crossed.

“Households are having to be much more careful with their money, as budgets are squeezed and bang for buck continues to erode. With inflation remaining high and mortgage rates still rising, household budgets will remain under considerable pressure into 2024.”

He says data suggests more restraint is emerging in the upper North Island and lower South Island.

Richard McIntyre, from Federated Farmers, says many farmers are struggling to make a profit as a result of higher on-farm costs and China’s economic slowdown.

Climate change policy and other new regulations are also adding to their administrative burden.

“Other challenges remain too, with falling construction intentions, rising unemployment, falling job ads, and increasing pressure on the primary sector.

“Stronger trends in international dairy auctions have prompted a slight lift in the expected dairy pay-out, but this season is still expected to return $1.8 billion less than the season before. Slaughter prices for mutton, lamb, and beef have also fallen in recent months too, some by considerable amounts. This lower revenue, coupled with on-farm costs rising 7.3 per cent pa so far in 2023, is adding extensive pressure to provincial economies.

“We expect these factors will undermine economic momentum and set the tone for a more subdued economic outlook.”

He says areas that have a stronger level of tourism recovery are “feeling a lot better” than other parts of the country.

“I think you are seeing a divergence starting to occur there, it's built up over the last year and a bit. The Queenstown population jumped eight per cent, that's a massive increase.

”But a number of provincial areas, they're not necessarily seeing poor economic outcomes yet but recently the conversations we have been having with them have been shifting."

He says many provincial areas have done well through the pandemic when the primary sector was not as affected as other industries.

“Those trends have turned around. Northland saw strong levels of continued population growth through the pandemic. Last year it had perfectly solid levels but it didn't bounce up like you saw national trends bounce up.”

A number of primary sector businesses were being hard hit, he says,

“We haven't seen how much of an influence that will have yet. Some of the areas I've been touring in recent weeks have been highlighting some of the concerns and challenges... There are a lot of challenges that are clear to see but haven't made their way into official figures yet.”

He says building consents have dropped everywhere.

“The hit is coming and it's spreading across the country. Jobseeker numbers are up on a year ago and in some places by a considerable margin. Gisborne and Tasman have seen 10 per cent-plus growth. There are bigger challenges emerging.”

-Susan Edmonds/Stuff.