The crippling effect of last year's drought on Palmerston North is part of the reason retail growth in the region has been so strong at the beginning of this year, an economist says.
Paymark's Palmerston North region, which includes the Manawatu and Horowhenua Districts, recorded the second highest increase in electronic card spending in the country during February.
It continues an eight-month run of strong growth which began in July 2013. $136 million of transactions were processed across the Paymark network in the region in February, up 9.2 per cent on the same period in 2013.
The Paymark network accounts for about 75 per cent of all electronic card spending in New Zealand.
The increase was second only to the Marlborough region, which recorded an increase of 12.1 per cent, and equates to an added cash injection to the region of $11.4m.
Palmerston North's accommodation sector led the growth, with spending up 20.9 per cent, while spending on food and fuel, which includes cafes and restaurants, increased 9.6 per cent.
Palmerston North City Council economic policy adviser Peter Crawford said last year's drought slowed February growth to just 2.4 per cent in 2013 and to a certain extent the region was catching up.
"We'd expect the next few months, in particular, to be really strong for growth.
"Farmers just did not have anything to play with this time last year and they did not spend. With the better season and the increase in the interim payout they're looking at, they've got more in their pockets."
- Manawatu Standard
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