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Economic growth steady despite building slowdown

15 June 2017

Gross domestic product (GDP) rose 0.5 percent in the March 2017 quarter, following an increase of 0.4 percent in the December 2016 quarter, Stats NZ said today.

"Much lower building activity combined with mixed results for the service sector took the shine off higher dairy production and saw a second quarter of moderate overall GDP growth,” national accounts senior manager Gary Dunnet said.

"At an industry level, 11 out of 16 industries increased this quarter, with agriculture and retail trade having the biggest increases, while construction was significantly down."

Agriculture grew 4.3 percent due to higher milk production. This flowed through to higher dairy product manufacturing, which contributed to the overall rise in food, beverage, and tobacco product manufacturing. Dairy exports fell 11 percent in the March 2017 quarter, resulting in a build-up in dairy inventories.

Construction fell 2.1 percent, with all building sectors showing a fall. Non-residential building construction, declining from a recent peak, was the key driver. This was also reflected with falling investment in both residential and non-residential building construction.

Overall investment was up despite lower building activity and less investment in transport equipment. Investment in plant, machinery and equipment has been the strongest in almost seven years, reflecting higher domestic production and greater imports of machinery.

Activity in the service industries was mixed, up 0.4 percent over the March 2017 quarter. The main driver of growth was retail trade and accommodation. In contrast, transport, postal, and warehousing; and rental hiring and real-estate services were down.

Household spending bounced back this quarter, up 1.3 percent, reflecting strong growth in retail trade. This rise contributed to an annual growth rate of 4.7 percent, the largest increase in household spending in over a decade.

Net exports were down. Exports of goods and services fell 0.4 percent, while imports of goods and services increased 1.3 percent.

GDP per capita decreased 0.1 percent, following a 0.2 percent fall in the December 2016 quarter.

Annual GDP growth for the year ended March 2017 was 3.0 percent.

The size of the economy in current prices was $265 billion.

Ends

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