The North Island is outperforming the South Island across a range of economic growth measures, a new report shows.
And Northland marks the spot for fastest growing region for a second quarter in a row, with job growth up nearly 5 percent year-on-year.
A regional economic scoreboard released by ASB Bank on Monday shows in the December 2020 quarter, the North Island outperformed the South Island across a range of measures including employment, construction, retail trade and house prices.
Referring to the divide of the rural and tourism sectors as a "tale of two islands", ASB chief economist Nick Tuffley said it was a quarter of "bumper summer crops" and "strong export demand".
Economic performance rose in regions where production of primary goods is concentrated, including Bay of Plenty, Gisborne and Hawkes Bay.
"Primary producing regions are really seeing the benefit of strong export demand during a period when some other industries are struggling, and we expect this trend to continue," Tuffley said.
House price growth in Bay of Plenty and Gisborne outpaced the rest of the country.
"Solid annual house price growth and residential consents were the star of the show in the Bay of Plenty, and over in Gisborne, annual house price growth outstripped the rest of the country at 31 percent compared with the same time last year," Tuffley added.
Northland took the top spot for quarterly growth for a second consecutive quarter. Jobs in the region grew 4.8 percent year-on-year and retail sales, residential construction and house sales were in the upper half. Looking forward, it's hoped summer drought conditions don't impact the region's performance.
"All-in-all, it's a good comeback story for a part of the country that still has pockets of real hardship," Tuffley said. "We suspect the strength of the forestry sector, aided by solid demand from China, might be one factor that's helping."
Elsewhere in the North Island, small drops in economic performance were recorded in the Waikato and Manawatu/Wanganui regions. There was no change in Northland and the Bay of Plenty.
In the South Island, the biggest quarterly drops were recorded in Marlborough, Tasman and Southland. These regions, along with Canterbury and Otago, were ranked in the bottom five.
Reliant on international travel, Otago was at the bottom for a second consecutive quarter, while Marlborough dropped eight places to second-to-last.
"Unsurprisingly, Otago locals weren't feeling as optimistic as the rest of the country and the region ended the quarter with the lowest level of consumer confidence," Tuffley said.
"On a positive note, with the vaccine rollout underway we may see tourism pick up in future, particularly if any 'bubbles' appear soon."
Low interest rates, a hot housing market and a chronic shortage fueled economic activity. Residential building consents were up 15 percent.
"We think construction and house price growth both have a bit further to run before cooling later in the year, though the Government's recent housing announcement will slow the housing market a bit quicker than we recently anticipated," Tuffley added.