Economic Activity Strong In June Quarter
Gross Domestic Product: June 2001 Quarter
The level of economic activity increased 2.0 per cent in the June 2001 quarter, according to information released today by Statistics New Zealand. This follows a 0.3 per cent increase in the March 2001 quarter and a 0.4 per cent increase in the December 2000 quarter. For the year ended June 2001, the economy grew 2.3 per cent, down on the 5.2 per cent recorded in the previous June year.
Following two quarterly declines, internal demand rose this quarter largely due to an increase in business investment. This recovery, along with a rise in exports, resulted in the strong growth in GDP this quarter. Business investment increased across most asset types with, most notably, spending on plant machinery and equipment jumping 28.4 per cent following a fall last quarter. This increased demand was partly met by a run down in inventories. Investment in non-residential and other construction also recorded increases following falls last quarter.
Spending by households was up 0.7 per cent. There was strong growth in spending on durables (up 4.2 per cent), mostly attributable to used car purchases. Partly offsetting this was a fall in expenditure by New Zealanders travelling overseas (down 8.0 per cent).
Export volumes rose 2.8 per cent. The increase in exports of goods (up 4.7 per cent) outweighed the decline in exports of services (down 2.5 per cent). Increases were recorded for dairy exports, up 10.8 per cent, and forestry exports, up 13.2 percent which followed a decline of a similar size last quarter. Import volumes showed little change this quarter with an increase in goods being matched by a fall in services. There was a rise in the imports of vehicles and plant, machinery and equipment, consistent with the increase in household spending and investment. Imports of services fell 2.3 per cent, driven by declines in travel and miscellaneous services.
With both internal demand and exports up, industrial activity picked up across the board with only a few industries recording decreases. The most significant growth this quarter occurred in the goods producing industries, with manufacturing and construction both recovering strongly from declines in the previous quarter. All but one of the manufacturing industries increased activity with the largest increases recorded in dairy, other food and metal products manufacturing. Construction activity was up 7.3 per cent this quarter but still down 10.5 per cent for the year.
There was little change in the total activity of primary industries, with a small decrease in agriculture offset by increases in the fishing, forestry and mining and quarrying industries. Although both dairy and livestock production were down for the quarter, dairy production remains strong annually, up 10.3 per cent for the June year.
A cold, dry winter saw electricity generation increase this quarter, but low lake levels led to a greater reliance on the more expensive thermal generation. This resulted in a drop of 5.3 per cent in value added in this industry. Both wholesale and retail trade industries recorded increased activity this quarter.
The expenditure-based measure of GDP, released concurrently with the production-based measure, recorded a 1.8 per cent increase for the June quarter.