Thursday 22 December 2016 10:53 AM
NZ economy grows more than expected in 3rd qtr as construction boom continues
By Paul McBeth
Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming
construction sector continued to underpin activity, spilling over into related building services, and was bolstered by
tourism and transport services.
Gross domestic product grew 1.1 percent in the three months ended Sept. 30, accelerating from a revised 0.7 percent pace
in the June quarter, Statistics New Zealand said in a statement. That beat the Reserve Bank's expectations for growth of
1 percent and a 0.9 percent pace predicted in a Reuters survey of economists. The economy grew 3.5 percent from the same
period a year earlier.
Construction continued to feature prominently in the data, expanding 2.1 percent in the quarter and up 12 percent from a
year earlier, with both residential and non-residential driving activity in a country facing a mammoth pipeline of work
and increasingly stretched capacity. Business services grew 2 percent in the quarter, driven by activity in scientific,
architectural and engineering services, while rental, hiring, and real estate services grew 0.4 percent and
manufacturing expanded 1.2 percent.
Statistics NZ said all of the construction's sub-industries expanded in the quarter, reflecting "higher
construction-related investment, with continued investment in residential building."
The other arm of New Zealand's growth this year has been on the consumption side as an expanding population and record
levels of tourism stoke consumer demand. Retail trade and accommodation activity expanded 0.9 percent in the quarter,
and was 5.7 percent higher than a year earlier.
The country's increasing population has largely been soaked up by employers looking for staff, limiting wage gains in
recent years and stifling inflation. That's also meant per capita growth has been anaemic this year, though today's data
show GDP per capita expanded 0.6 percent in the September quarter and was up 0.9 percent on an annual basis. Real
national disposable income per capita, which measures the purchasing power of the nation's disposable income, rose 0.6
percent in the quarter for a 1 percent annual gain.
On an expenditure measure, GDP grew 1.4 percent, its biggest quarterly expansion since March 2011, and accelerating from
a 1.2 pace of expansion in June. That was driven by a 1.6 percent increase in household spending, which slowed from a 2
percent pace.
The GDP expenditure measure grew 4.5 percent from a year earlier, underpinned by the country's housing boom which drove
a 14 percent increase in residential building investment .
Gross fixed capital formation increased 1.4 percent, with a 30 percent surge in investment in transport equipment due to
increased spending on air transport. However, business investment was more muted, rising 0.2 percent with investment in
plant, machinery and equipment shrinking 6.5 percent and investment in intangible fixed assets down 1.8 percent.
The transport sector was also a driver of economic activity, expanding 3.7 percent in the quarter to be 4.7 percent
higher than a year earlier, mainly in road and air services.
The country's primary sector was the laggard in the quarter, with agricultural activity shrinking 1.6 percent on lower
dairy production and sheep and beef cattle farming. New Zealand's milk collection is expected to fall this season after
farmers culled stock to shore up their balance sheets, which were stretched by weak dairy prices. Those prices have
since rallied through the latter half of the year, and dairy farmers are now anticipating better returns this season.
New Zealand's balance of payments, also released today, showed the current account deficit widened to $4.89 billion in
the September quarter from a revised deficit of $932 million in the second quarter, largely due to a seasonal fall in
exports of merchandise goods. The annual deficit of $7.48 billion, or 2.9 percent of GDP, compared to a deficit of $7.37
billion, 2.9 percent of GDP, in June.
The net international liability position was $166.22 billion, or 64.9 percent of GDP, from a revised $162.99 billion, or
64.4 percent of GDP, in the prior quarter.
(BusinessDesk)
ends