Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search

 

NZ economy contracts 0.4% in the third quarter

NZ economy contracts 0.4% in the third quarter on spending slump

Dec. 23 – New Zealand’s economy shrank for at twice the pace predicted by the central bank in the third quarter, raising the prospect of more interest rate cuts to revive the worst slump in 10 years.

Gross domestic product fell 0.4% in the three months ended Sept. 30, according to Statistics New Zealand. Economists had expected a contraction of 0.5%, according to the consensus in a Reuters survey.

Reserve Bank Governor Alan Bollard has embarked on the deepest easing cycle since the official cash rate was introduced in 1999 to help revive an economy where inflationary pressures are expectedly to quickly ease. He is expected to cut the OCR to at least 4.5% next month from 5% currently.

The contraction in the third quarter follows a 0.3% decline in the first quarter and 0.2% fall in the second amid a slump in housing demand, soaring costs for food and fuel, and a drought that crimped farm production. Economists predict a second round impact as global financial market turmoil leaks into the wider economy, leading to lower company profits and job cuts.

“Bigger disappointment looms, with any scope for a material rebound in growth surely being squashed by the degree of global recession we’re now staring at,” Stephen Toplis, head of research at Bank of New Zealand, said before the figures were released. “We can expect 2009 will be another tough year.”

Household spending, which makes up almost two-thirds of the economy, fell 0.2% in the three months ended Sept. 30, the third quarterly decline, according to the government statistician. Service industries, which include transport, communications and retailers, fell 0.2%, the second quarterly slide.

Construction activity dropped 1.2% in the latest quarter, driven by a decline in residential building and construction trade services. The average New Zealand house price fell 6.8% in November from a year earlier, the second monthly slide of that magnitude, according to QV valuation figures this month.

Activity expectations among retailers slumped 21 percentage points to a net 49%, a record low, according to National Bank Business Confidence survey last week. Retailers including Warehouse Group and Briscoe Group are hoping for a pick-up in spending through the peak Christmas period after trimming their earnings outlook earlier in the year. Manufacturing fell 2.5%.

Activity in primary industries rose 2.1% in the third quarter, reflecting a 6% increase in farming production on increased dairy output and meat processing.

(Businesswire)

ENDS

© Scoop Media

 
 
 
 
 
Top Scoops Headlines

 

Any Questions: Scoop Launches New Q&A Website

It’s an easy way to find out party positions and allows you to view candidates’ answers side by side. It’s also a way for you to make your voice heard this election, and get the parties talking about the things that are important to you. More>>

ALSO:

Rawiri Taonui: The Maori Election

The election battle for the Maori seats 2017 opened last year when Maori Party President Tuku Morgan announced a peace deal with the Mana Movement aimed at securing all the Maori seats and holding the balance of power. More>>

Scoop HiveMind Project: Universal Basic Income - Are We Up For It?

This is an opportunity for you as one of the 4 million potential funders and recipients of a Universal Basic Income to collectively consider the issue:
1. Is UBI is a desirable policy for New Zealand; and
2. How should a UBI system work in practice. More>>

ALSO:

Lyndon Hood: National Announces Plan To Hit Youth With Big Mallets

The National party has announced its youth justice policy, which includes a controversial plan for recidivist serious youth offenders to be hit over the head with a comically large rubber mallet. More>>

ALSO:

Lyndon Hood: This ->

It's been brought to my attention that Labour's new campaign slogan is "Let's do this". A collective call to action. A mission. I myself was halfway out of the couch before I realised I wasn't sure what it was I was supposed to do. More>>

ALSO:

Scoop Hivemind Report: What New Zealanders Think About Affordable Housing

Ordinary citizens have had very few venues where they can debate and discuss as to what they believe has led to the crisis in affordable housing and how we might begin to address this. The HiveMind on affordable housing was about redressing the balance. More>>

ALSO: