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NZ 4Q GDP rises 0.6%, driven by service industries

Thursday 21st March 2019

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New Zealand’s economy grew in line with expectations in the fourth quarter, as the retail and accommodation sectors saw the strongest lift in activity since the 2011 Rugby World Cup.

Gross domestic product expanded 0.6 percent in the three months to Dec. 31 versus a 0.3 percent rise in the September quarter and was 2.3 percent higher than the same quarter a year earlier, Stats NZ said.

Economists had expected GDP to expand 0.6 percent on the quarter and 2.5 percent on the year, according to the median in a Bloomberg poll. The central bank had tipped an expansion of 0.8 percent.

The New Zealand dollar rose to 69.02 US cents from 68.73 cents immediately before the announcement. The local currency jumped to more than 69 cents earlier this morning after the US Federal Reserve lowered its 2019 growth outlook from 2.3 percent to 2.1 percent and signalled it may not raise rates again until 2020. 

“Growth this quarter was led by a 0.9 percent rise in service industries, while the goods-producing industries grew 0.2 percent,” national accounts senior manager Gary Dunnet said.

The service industries account for about 66 percent of GDP.

Within them, retail and accommodation rose 2.5 percent on the quarter, driven mainly by food and beverage services. Transport, postal and warehousing lifted 3.2 percent on the quarter, driven mainly by road transport, Stats NZ said.

Within the goods-producing industries, which represent around 19 percent of GDP, construction grew 1.8 percent on quarter after falling 0.6 percent in the September quarter.

Manufacturing activity, however, fell 0.4 percent during the quarter and electricity, gas, water and waste services fell 1.1 percent.

The primary industries, which represent 7 percent of GDP, fell 0.8 percent. Agriculture was down 1.3 percent, mining was down 1.7 percent, forestry and logging fell 1.6 percent and fishing activity was down 0.9 percent.

“Reduced livestock production had an impact on agriculture, while mining activity was again affected by the disruptions at the Pohokura field, after a partial recovery last quarter,” said Dunnet.

On an expenditure measure, GDP expanded 0.5 percent during the quarter and 2.5 percent on the year.

Within the expenditure measure, household spending was up 1.3 percent in the December quarter and investment in fixed assets was up 1.4 percent on the quarter, after falling 1.1 percent in the September quarter.

On a per capita basis, GDP grew 0.1 percent in the quarter from a revised 0.1 percent fall in the September quarter. For the year ended December, per capita GDP rose 0.9 percent, marking the lowest annual growth since 2011.

Stats NZ also said the real purchasing power of New Zealanders fell in the December quarter with real gross national disposable income – or RGNDI – down 0.2 percent in the December quarter.

Stats NZ said that a population increase of 0.4 percent over the quarter meant that the RGNDI per capita was down 0.6 percent in the December quarter following a 0.4 percent lift in the September quarter.

The size of New Zealand’s economy in current prices was $293 billion, Stats NZ said.

(BusinessDesk)

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