Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


New Zealand GDP Strong:Construction boom ramps up & broadens

New Zealand GDP Strong: Construction boom ramps up and broadens

New Zealand's GDP print was strong for Q1 and broadly in line with the market expectation. GDP was estimated to have risen by +1.0% in Q1 and +3.8% y-o-y (market had +3.7%). The key driver of growth in the quarter was construction, which has been supported by the rebuild of the earthquake damaged Canterbury region as well as building in Auckland. Exports also rose solidly in the quarter, though household consumption was flat, which was a surprise. Overall, these numbers are broadly consistent with RBNZ's expectations. This will support the RBNZ's plans to deliver further rate hikes in coming quarters. We expect another 125bp of hikes by end-2015.

Facts
• GDP rose by +1.0% q-o-q (market had +1.1%; HSBC had +1.0%) to be 3.8% y-o-y (market had +3.7%; HSBC had +3.5%).
• Across industries, construction was by far the largest contributor to overall growth (+0.8ppts) with construction output rising by +15.3% y-o-y. Over the year, agricultural production also showed strong growth (+9.3% y-o-y) while health care (+5.5% y-o-y), finance and insurance (+4.2% y-o-y) and retail (+4.1% y-o-y) all expanded solidly. All industries except professional and scientific services showed growth in output over the past year.
• Across expenditure components, investment rose by +10.1% y-o-y, supported by a rise in residential and non-residential investment. Exports also rose strongly in the quarter and were +2.8% higher y-o-y. Household consumption was flat in the quarter, with a rise in durables goods consumption offset by a fall in spending on services, to be +2.7% y-o-y.

Implications
Today's GDP numbers confirmed that the economy is booming. GDP grew at an above trend pace in the quarter and over the year. The numbers were broadly in line with the market expectation and with the RBNZ's latest published view.

By far the largest contributor to growth has been a construction boom that is underway. This has been led by the rebuilding activity in the Canterbury region, although today's numbers also showed strong growth in residential construction outside of Canterbury. Construction outside of Canterbury has been supported by low interest rates, rising housing prices and recent changes in land release policies, particularly in Auckland.

Exports also continued to support growth in the quarter, as the volume of dairy exports has been rising. Agricultural production rose by a solid +9.3% y-o-y.

Somewhat surprisingly, household consumption was flat in the quarter. While spending on durable goods rose, this was offset by a fall in spending on services. Nonetheless, household consumption remained solid for the year as a whole, growing by 2.7% y-o-y.

In our view, there was little in today's report to deter the RBNZ from its suggested path for rates. The RBNZ plans to deliver further rate hikes in coming quarters and, in line with their view, we expect 125bps of further hikes before end-2015.

Click here for the full report.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

R18: The Warehouse Group Praised For Removing Games

The decision by New Zealand’s largest retailer The Warehouse Group (TW Group), to withdraw stocks of the latest version of Grand Theft Auto V (GTA V) and other R18 games, has been praised by advocacy group Stop Demand Foundation. More>>

ALSO:

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news