Gross Domestic Product - March 1999 quarter
Economy recovers lost ground
Release from Statistics New Zealand
Economic activity increased in the March quarter by 0.7 per cent, said Government Statistician Len Cook when releasing the latest Gross Domestic Product figures. Economic activity has now recorded growth for the last three quarters and the total level of economic activity has finally surpassed the previous peak recorded in the December 1997 quarter. For the year to March, however, the economy contracted 0.2 per cent, the result of the severe drought and last year's downturn in Asian export markets.
Growth this quarter, as in December, has been fuelled by both internal demand and exports. The biggest lift to internal demand, up by 1.5 per cent, has come from investment by businesses on fixed assets. Added to this, households have sustained consumer spending for the fourth quarter in a row and maintained investment in new housing for a second quarter. The growth recorded in exports for the December quarter has been sustained but much of the lift in the domestic economy continues to be met from imports.
The growth this quarter has occurred across the economy, with few industries recording falls. In line with this the Household Labour Force Survey reported a 0.4 per cent increase in average hours worked for the March quarter. The major impetus continues to be in the service industries, most noticeably this quarter in distribution, transport and communications.
A fall was recorded in agriculture, which was hampered by a second successive summer of drought. This fall has carried through into primary food processing. In total, however, manufacturing activity was up 0.4 per cent. The biggest increase occurred in machinery and appliance manufacture in line with increased business investment and consumer spending.
Business investment on fixed assets increased for a second successive quarter, up 4.8 per cent. In the latest quarter spending was strongest for plant, machinery and equipment. Investment on infrastructure was also up this quarter, but that for non-residential buildings fell noticeably and is reflected by a downturn in the building construction industry.
Household spending increased 0.6 per cent this quarter and after steady growth throughout the last year is now 2.0 per cent higher than the same quarter a year ago. For the third quarter in a row, consumer spending was strongest for durables, most noticeably this quarter for furniture and major appliances. Investment on new housing rose for the second consecutive quarter. The turnaround in housing investment, after four quarters of decline, has coincided with mortgage interest rates being at their lowest in more than two decades.
Rising visitor numbers and recovery in Asian export markets has bolstered New Zealand's export volumes. Export volumes, in total, rose 1.5 per cent and after the difficulties of 12 months ago annual growth was 2.1 per cent. Import volumes were up by 2.7 per cent in the latest quarter. Growth in imports of goods has been recorded principally for machinery and equipment, reflected in increased business investment. Imports of services, however, fell as a result of fewer residents travelling abroad.
The expenditure based measure of GDP, released concurrently with the production based measure increased 1.1 per cent.
The GDP implicit price deflator rose 1.2 per cent over the March year. This is a broad measure of the overall price change for final goods and services produced in New Zealand.