By Rebecca Howard
Sept. 19 (BusinessDesk) - New Zealand’s economy grew more than expected in the second quarter, with stronger services output offsetting a slide in manufacturing and construction.
Gross domestic product expanded 0.5 percent in the three months ended June 30, following a 0.6 percent rise in the March quarter. It was up 2.1 percent from the same quarter a year earlier, Stats NZ said.
Economists polled by Bloomberg predicted GDP expanded a quarterly 0.4 percent and was 2 percent higher than a year earlier. The Reserve Bank forecast growth of 0.5 percent.
The size of New Zealand’s economy in current prices reached $300 billion for the first time, Stats NZ said.
“It took about 14 years for the economy to go from $100 billion to $200 billion and nine years to reach $300 billion," said national senior accounts manager Gary Dunnet.
The New Zealand dollar rose as high as 63.31 US cents from 63.13 cents immediately before the announcement. It was recently trading at 63.26 US cents.
“Service industries, which represent about two-thirds of the economy, were the main contributor to GDP growth in the quarter,” Dunnet said.
The services industries output grew 0.7 percent in the quarter, after expanding 0.3 percent in the March period.
The main drivers of growth were rental, hiring and real estate services, which grew 1 percent, transport, postal and warehousing services were up 1.8 percent, arts, recreation and other services lifted 2.8 percent, and public administration, safety and defence expanded 1.8 percent.
The goods-producing industries, which represent around 19 percent of GDP, shrank 0.2 percent after expanding 1.9 percent in the prior quarter. Manufacturing activity fell 0.8 percent, weighed down by a 2.8 percent contraction in food, beverage and tobacco manufacturing.
Construction activity fell 0.8 percent due to a decline in non-residential construction, Stats NZ said. Construction activity had expanded 3.4 percent in the March quarter.
The primary industries, which represent 7 percent of GDP, rose 0.7 percent after falling 0.5 percent in the prior quarter.
Agriculture activity grew 1.1 percent, driven by recoveries for sheep and beef cattle and dairy farming. Mining activity shrank 4.4 percent on reduced exploration activity. Forestry and logging activity expanded 1.9 percent while fishing activity lifted 1.2 percent.
On an expenditure basis, GDP expanded 0.7 percent on the quarter and 2.6 percent on the year.
Within the expenditure measure, household spending was up 0.5 percent in the June quarter while investment in fixed assets fell 1 percent. Exports of goods and services fell 1.8 percent while imports of goods and services fell 0.3 percent.
On a per capita basis, GDP expanded 0.2 percent in the June quarter following a 0.1 percent lift in March.
Stats NZ said the real purchasing power of New Zealanders rose in the June quarter and real gross national disposable income – or RGNDI – was up 0.8 percent.
With a population increase of 0.4 percent, the RGNDI per capita was up 0.5 percent on the quarter, it said.