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Data Flash (NZ) Strong Manufacturing Activity Q4

Data Flash (New Zealand)

Strong Manufacturing Activity in Q4 GDP Growth Estimate Revised up to +1.5% qo

QKey Points

* Seasonally adjusted manufacturing sales rose 3.8%in the December quarter, which lifted the annual rate of growth to 11.3%. * Food, wood and metal product manufacturing were the strongest contributors to the strong Q4 performance. * Stock levels increased by 3.6% (s.a.) in Q4, with a strong contribution from the meat and dairy sector as a result of excellent climatic conditions. * We estimate that manufacturing GDP increased by 4.0% qoq in the December quarter.

Economic Survey of Manufacturing Sales ($million) (s.a.) qoq. % ann. % Jun-98 12,734 -1.3 -1.9 Sep-98 12,626 -0.9 -1.1 Dec-98 12,333 -2.3 -5.8 Mar-99 12,417 +0.7 -3.8 Jun-99 12,482 +0.5 -2.0 Sep-99 13,221 +5.9 +4.7 Dec-99 13,726 +3.8 +11.3 Source: DB Global Markets Research, Statistics NZ


Manufacturing sector activity was significantly stronger than expected, which has led us to revise up our estimate of Q4 GDP growth from 1.2% to 1.5%. Such a result would imply that the NZ economy grew by 4.7% between Q4/98 and Q4/99. The RBNZ forecasts to be published on 15 March are unlikely to contain such a strong Q4 growth estimate. In combination with the stronger-than-expected import and export price data published earlier today (see our Data Flash), that suggests significant upside risk to the inflation track to be presented by the Bank.

Ulf Schoefisch, Chief Economist, New Zealand, (64) 9 351-1375

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