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Business investment and exports drive growth

Embargoed until 10:45am – 28 March 2008

Business investment and exports drive growth

Economic activity increased 1.0 percent in the December 2007 quarter, following an increase of 0.5 percent in the September 2007 quarter, Statistics New Zealand said today. In the year ended December 2007 the economy grew 3.1 percent, up from the 1.5 percent recorded in the year ended December 2006.

Gross fixed capital formation was up 3.9 percent in the December 2007 quarter, reflecting strong business investment. Business investment was driven by increased investment in non-residential buildings; plant, machinery and equipment; and intangibles. Intangibles are non-physical assets such as software and mining rights. The increase in intangibles this quarter was a result of increased exploration activity.

Exports of goods rose 8.1 percent in the December 2007 quarter, with dairy products and petroleum the main contributors. Dairy exports in the December 2007 quarter reflect both an increase in production and a run down in inventories. Imports of goods were up 4.3 percent, with imports of consumption goods, intermediate goods and capital goods all up this quarter.

Growth in household final consumption expenditure was 0.5 percent in the December 2007 quarter, following 0.4 percent growth last quarter. Increased expenditure on durables and services were again the main drivers of the quarter's growth.

From an industry perspective, activity was up in all three major industry groups this quarter. Primary industries increased 4.8 percent due mainly to dairy production and mining activity. Goods producing industries were up 1.9 percent this quarter due to increased manufacturing and construction activity.

Service industries were up 1.0 percent with property and business services the main contributor.

The expenditure-based measure of GDP, released concurrently with the production-based measure, recorded a 0.8 percent increase in the December 2007 quarter.

Geoff Bascand
Government Statistician

ENDS

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