Economy grows 0.8 percent

Surge in dairy and tourism boost economic growth, but construction slows
Watch: National adamant economy is strong but Adern says 'we're behind expectations' as latest GDP figures released

22 September, 2017

Seasonally adjusted GDP rose 0.8 percent in the three months to the end of June, Statistics New Zealand said, up from a revised 0.6 percent the previous quarter.

While there were signs that the construction boom may have peaked, exports jumped 5.2 per cent, the largest quarterly rise in almost 20 years.

Growth in exports of services benefited from strong tourism in the June quarter, helped by two worldwide events staged in New Zealand - the World Masters Games and the British & Irish Lions Rugby Tour.

A surge in dairy sales saw New Zealand's exports climb at the fastest rate in close to 20 years during the September quarter. Stats NZ noted that dairy export volumes were up 19 percent in the June quarter as dairy inventories were run down. The median in a Bloomberg poll of 12 economists' forecasts was for GDP to expand 0.8 percent in the three months ended June 30 and 2.5 percent on the year.

Activity, however, was weighed on by a construction, which contracted 1.1 percent following the 2.1 percent decline in the March quarter.

"One area where we are surprised was the fall in other construction activity, which typically includes infrastructure construction", she said. Retail trade and accommodation, which is supported by strong tourism, got a particular lift from the World Masters Games and the British and Irish Lions tour, gaining 2.8 per cent on the quarter and 6.6 per cent on the year.

Today's figures show agriculture, forestry and fishing growth was unchanged on the quarter and down 0.9 percent on the year.

On the positive side, there was an expected rebound in transport activity, up 3.5%, manufacturing activity rose 1.8%, largely driven by a 5.7% jump in food manufacturing, plus there was a 4.1% rise in petroleum and chemical manufacturing, against Westpac's expectation of a fall. This follows a flat result in the March 2017 quarter. It was the first time construction activity has dropped in consecutive quarters since early 2012.

On an expenditure measure, GDP increased 1.1 percent, underpinned by a 5.2 percent increase in the exports of goods and services as well as a 0.9 percent increase in household consumption expenditure. "In that light, a 0.8 per cent quarterly rise is not that impressive", he said.

New Zealand's annual net migration was 72,100 in the August 2017 year, compared with 69,100 in the August 2016 year, Stats NZ said, adding that migrant arrivals reached 132,200, a new annual record, and migrant departures were 60,100 in the year ended August 2017.

Financial services fell 0.2%, as lending growth slowed, and rental and real estate services rose by 0.8%, but that was relatively soft for a June quarter.

The increase was mostly due to the 6-percent increase in visitor arrivals from Australia, and 21-percent increase from the United States, said a Stats NZ statement.

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