Decline in economic activity continues

26 September 2008

Decline in economic activity continues

Economic activity, as measured by gross domestic product (GDP), declined 0.2 percent in the June 2008 quarter, Statistics New Zealand said today. This follows a decline of 0.3 percent in the March 2008 quarter.

The last time there were consecutive quarters of decline in economic activity was the three quarters ending March 1998. Service industries decreased 0.4 percent in the latest quarter, following an increase of 0.5 percent in the March 2008 quarter. The main drivers of the decline in service activity were real estate and business services (down 1.6 percent), and retail, accommodation and restaurants (down 1.9 percent).

In the June 2008 quarter, activity in the goods-producing industries declined 0.2 percent. The largest drivers of this decline were construction (down 3.8 percent), and electricity, gas and water (down 1.6 percent). Partly offsetting these decreases was a 1.4 percent increase in manufacturing activity.

The decline in construction activity was in both residential and non-residential building. Dry weather contributed to more thermal (and less hydro) electricity generation, which is more expensive to produce. Activity in the primary industries declined 0.6 percent in the June 2008 quarter, following a decline of 4.6 percent in the March 2008 quarter. Agriculture decreased 0.6 percent, as the drought continues to impact on both output and costs.

The expenditure measure of GDP, which is released concurrently with the production measure, was down 0.5 percent in the latest quarter. In the June 2008 quarter, total exports fell 0.2 percent, while total imports were up 3.3 percent. The rise in imports this quarter was mainly due to large capital items, related to the oil industry, that were imported during the quarter. These capital items were also the main reason for the increase in business investment the June 2008 quarter.

Household consumption expenditure, which measures the spending of New Zealand households, fell 0.3 percent in the June 2008 quarter, following a 0.4 percent fall in the previous quarter. The last time this component declined for two quarters in a row was in 1992. In the June 2008 quarter, expenditure on durable goods (such as motor vehicles) and non-durable goods (such as food and beverages) were both down.

Geoff Bascand

Government Statistician 26 September 2008

ENDS

[A correction has been made to the Gross Domestic Product: June 2008 media release. The statement "In the June 2008 quarter, exports of goods fell 0.2 percent, while imports of goods were up 3.3 percent" has been changed to "In the June 2008 quarter, total exports fell 0.2 percent, while total imports were up 3.3 percent".]

Gross Domestic Product: June 2008 quarter - Statistics New Zealand

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