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NZ wholesale trade dips in Dec quarter, could weigh on GDP

Thursday 7th March 2019

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New Zealand's wholesale trade dipped in the December quarter after strong rises in the prior six months and may lead economists to lower their expectations for economic growth. 

Seasonally adjusted sales fell 0.1 percent in the three months to December after a 2.2 percent rise in the September quarter and a 2.6 percent rise in the June quarter, Stats NZ said. 

"We were expecting more of a moderate increase. That didn't happen and, at least at the margin, puts some downward pressure on the gross domestic product calculation," said Bank of New Zealand senior economist Doug Steel.

He said tomorrow's manufacturing survey and building work put in place data are also important for GDP: "Once we have those two, we will be able to firm up our view on GDP."  

Three of the six wholesale industries had lower sales while three were higher on the quarter. The biggest fall was in machinery and equipment, down 2.1 percent, while the biggest rise was in commission-based wholesaling, up 6.7 percent. 

Steel said the fall in manufacturing and equipment may suggest some weakness in business investment in the quarter and would "tie in with what we are seeing in some of the business surveys on investment intentions and business confidence weakness. It is certainly something to keep an eye on."

Wholesale trade covers intermediary transactions between manufacturers and retailers, which feeds into the national accounts and is used by economists to predict wider economic activity.

Inventories were up 9.8 percent on the year and the total value of wholesale trade stocks held at Dec. 31, 2018 was $12.8 billion. Stocks rose in five of the six industries, with machinery and equipment up 15 percent and motor vehicle and motor-vehicle parts up 17 percent. 

Inventories had risen an annual 13.3 percent in the September quarter and 12 percent in the June quarter.

Unadjusted wholesale trade sales climbed 4.8 percent to $29.3 billion from a year earlier. 

(BusinessDesk)

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