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NZ economy expands less than expected in fourth quarter; kiwi falls

Thursday 16th March 2017

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New Zealand’s economy expanded less than expected in the fourth quarter, weighed by weaker activity in the primary sector. The kiwi dollar fell.

Gross domestic product expanded 0.4 percent in the three months ended Dec. 31, following a revised 0.8 percent increase in the September quarter, Statistics New Zealand said. Economists had tipped growth quarterly growth of 0.75 percent in a BusinessDesk poll. The economy grew 2.7 percent from the same period a year earlier.   

“Growth in service industries was partly offset by weaker activity in primary industries also flowing through into manufacturing,” national accounts senior manager Gary Dunnet said.  The services sector expanded 0.7 percent while activity in the primary industries fell 1.0 percent.

The New Zealand dollar fell to 70 US cents from 70.37 cents immediately before the data release.

Agricultural activity fell 0.6 percent, due to falling milk production while forestry and logging activity decreased 5.1 percent and mining activity fell 2.3 percent in the December quarter.

Activity in goods producing industries fell 0.3 percent on the quarter, with manufacturing down 1.6 percent due to decreased food, beverage and tobacco product manufacturing, the statistics agency said. Meat manufacturing and dairy product manufacturing also fell.

Construction activity, however, continued to increase, rising 1.8 percent in the December quarter. Residential and non-residential building were both up, which was also reflected in an increase in construction trade services.

Services, however, was the main driver of growth in the quarter, with business services activity rising 1.7 percent and arts, recreation and other services lifting 3.8 percent.  

Activity in the service industries makes up about 70 percent of GDP, while activity in the primary industries makes up about 10 percent.

Per capita GDP growth, meanwhile, remained anemic, falling 0.2 percent in the December quarter after a revised 0.3 percent increase in September. It was up 0.9 percent in the year ended Dec. 31.  

Real gross national disposable income per capita, which measures the purchasing power of New Zealand’s disposable income, was up 2.3 percent in the December quarter following a revised 0.4 percent gain in the September quarter. Over the year, it rose 2.0 percent.

On an expenditure measure, GDP rose 0.2 percent in the December quarter, following a revised 0.9 percent increase in the September quarter.  

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