NZ economic growth softer than expected in Sept quarter

Thursday 20th December 2018

New Zealand's economy grew less than expected in the September quarter, delivering the lowest quarterly growth rate in five years.

Gross domestic product expanded 0.3 percent in the September quarter, down from a 1 percent rise in the prior quarter, and was up 2.6 percent on the year, Statistics New Zealand said.

Economists had expected quarterly growth of 0.6 percent and 2.8 percent annual growth, according to the median in a Bloomberg poll. The central bank was forecasting growth of 0.7 percent.

The New Zealand dollar dropped to 67.70 US cents as at 10.50am from 68.04 cents immediately before the release.

The weaker-than-expected data will add to the view that the Reserve Bank is in no hurry to lift rates and could even put a rate cut back on the table.

Growth was mixed, with 11 of 16 industries recording higher production in the quarter.

Activity in service industries – which account for about 66 percent of GDP – grew 0.5 percent on the quarter after lifting 1 percent in the June quarter. It was the slowest rate of growth in six years, Stats NZ said. The main drivers of growth were rental, hiring and real estate services, which lifted 0.7 percent, and business services, which rose 0.6 percent.

Activity in the goods-producing industries, which is around 19 percent of the GDP, fell 1 percent, “dragging down overall growth this quarter,” said national accounts senior manager Susan Hollows.

Construction was down 0.8 percent as work after the Kaikoura quake continued to wind down.

Manufacturing activity shrank 0.8 percent, weighed down by food, beverage and tobacco manufacturing, which contracted 2.7 percent. Transport equipment, machinery and equipment manufacturing fell 3.9 percent.

Electricity, gas, water and waste services shrank 2.3 percent after lifting 4.1 percent in the prior quarter when large increases in hydro and wind generation drove high levels of renewable electricity generation.

Activity in the primary industries, which also includes forestry, logging and mining, rose 2.2 percent on the quarter versus a fall of 0.1 percent in the prior quarter. The primary industries represent about 5 percent of GDP.

Mining grew 12.4 percent after a 17 percent contraction in the prior period. Oil, gas and coal production all increased. Agriculture activity was down 0.4 percent after growth of 4.1 percent in the June quarter.

Forestry and logging activity lifted 7 percent, adding to a 6.4 percent expansion in the June quarter.

On a per capita basis, GDP was unchanged from June when it grew 0.5 percent. For the year ended September, GDP per capita grew 1 percent.

According to the statistics agency, per capita real gross national disposable income was up 0.5 percent following a lift of 0.4 percent in June. It was slightly higher than the population growth of 0.4 percent in the September quarter. Annually per capita real gross national disposable income was up 1.3 percent. Population growth, however, was up 2 percent on the year.

On an expenditure measure, GDP expanded 0.5 percent in the September quarter and 2.7 percent on the year.

The size of New Zealand’s economy in current prices was $291 billion, Stats NZ said.

(BusinessDesk)

Comments from our readers

No comments yet