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GDP growth slowed by hot weather

Published: Thu 15 Mar 2018 04:33 PM
The economy continued to expand at the end of last year, but hot, dry weather curbed the rate of growth.
Hot, dry weather before Christmas led to a 2.7 percent decrease in agricultural production Photo: Southland Regional Council
Official figures show gross domestic product, which is a broad measure of the health of the economy, increased 0.6 percent in the three months to December, and 2.9 percent for the year.
The services sectors led the way, with real estate agents and letting agencies doing well.
"Growth was widespread across many service industries, with business services, and rental hiring and real estate services providing momentum," Statistics NZ national accounts senior manager Gary Dunnet said.
"Retail trade and wholesale trade were also key contributors to growth this quarter."
But hot, dry weather hit agricultural production, which declined 2.7 percent.
Falling milk production led to less processing and fewer dairy exports.
Household spending and investment remained buoyant, due in part to people eating out more and spending more on groceries and alcohol.
The dollar fell initially on the news, dropping 0.25 cents to US73.05.
ASB Bank chief economist Nick Tuffley said, leaving the weather aside, the economy was not doing too badly.
"The underlying momentum looks pretty solid."
While growth remained respectable, once the rising population was factored in, the gains per person were mediocre, rising 0.1 percent in the December quarter and 0.7 percent over the year.
ANZ Bank senior macro strategist Phil Borkin said he expected the pace of growth to remain around current levels.
"There remain risks from the global backdrop, especially, most recently, on the trade front, and we expect household consumption growth to slow ... as precautionary saving is rebuilt," he said.
"But with fiscal stimulus around the corner, the terms of trade at historic highs and internal and external imbalances far less pronounced than they'd typically be at this point cycle, we don't see the cycle tipping over in any meaningful way just yet."
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