Economic Activity Continues to Rise

24 September 2004

Gross Domestic Product: June 2004 quarter

Economic Activity Continues to Rise

Economic activity increased 0.9 percent in the June 2004 quarter, according to Statistics New Zealand. This follows increases of 2.1 and 0.9 percent in the March 2004 and December 2003 quarters, respectively. In the year ended June 2004, the economy grew 4.4 percent, up from the 4.1 percent increase in the June 2003 year.

Internal demand rose 2.2 percent in the June 2004 quarter. Household spending remained at high levels and grew by a further 0.3 percent, following the strong 2.6 percent increase in the previous quarter. Investment in residential housing was also maintained, rising 6.6 percent to be 13.0 percent higher for the June year. Business investment increased as well this quarter – investment in fixed assets was up 5.3 percent and there was a further build-up in inventories. External demand was also up. Export volumes lifted 2.9 percent, with goods up 1.6 percent and services up 7.5 percent. The increase in service exports largely reflects a strong rise in in-bound tourism spending.

Much of the increase in internal demand was met by imports, which were up 6.7 percent. Merchandise imports rose 9.0 percent, with major contributions from transport equipment (up 16.0 percent) and machinery and electrical equipment (up 9.1 percent). Imports of services fell because the increased spending by New Zealanders travelling abroad was more than offset by falls in other imported services.

Industry production was mixed this quarter. Growth continued in the service industries (up 0.7 percent), with wholesale trade and the transport and communication group the main contributors to the increase. Activity in goods-producing industries showed little change, with the lift in construction activity (up 6.6 percent) mostly offset by a decline in manufacturing (down 1.9 percent). Although manufacturing sales were up for the quarter, much of this was met from finished goods inventory, and overall production fell. Activity in primary industries decreased 0.5 percent.

The expenditure-based measure of gross domestic product (GDP), released concurrently with the production-based measure, recorded a 1.1 percent increase for the June 2004 quarter compared with the March 2004 quarter.

Brian Pink Government Statistician

ENDS

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