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NZ manufacturing, construction show pick-up as economy gradually revives

Monday 8th March 2010

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New Zealand manufacturing sales volumes climbed in the fourth quarter, while home construction led to an increase in building work put in place, signs that the nation’s economy is gradually reviving as expected.

Manufacturing sales, excluding inflation, rose 3.1% in the final three months of 2009 from the third quarter, according to Statistics New Zealand. Building work put in place rose 0.7%, as a 7.4% gain in residential construction made up for a 6.1% decline in non-residential, a separate report showed.

The data is consistent with the central bank’s view that the economy’s recovery will continue apace this year, allowing it to raise interest rates by June 30. Some economists have had to wind back their predictions for interest rate increases from as soon as April amid mixed signals from the domestic economy.

“The construction and manufacturing sectors look set to provide a positive contribution to GDP growth in the December quarter,” said Philip Borkin, economist at Goldman Sachs JBWere. The figures are in keeping with Borkin’s estimate for fourth-quarter GDP growth of 1.1%.

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