Economy declines for third consecutive quarter

23 December 2008

Economic activity, as measured by Gross Domestic Product (GDP), declined 0.4 percent in the September 2008 quarter, Statistics New Zealand said today. This followed decreases of 0.3 percent and 0.2 percent in the March and June 2008 quarters, respectively. On an annual basis, economic activity increased 1.7 percent in the year to September 2008.

From an industry perspective, primary industries were up 2.1 percent in the September 2008 quarter, while goods-producing industries and services declined. The increase in primary industries was mainly due to agriculture (up 6.0 percent). Dairy production and cattle processed for meat were the main drivers within the agriculture industry.

Goods-producing industries declined 1.4 percent this quarter, mainly driven by manufacturing (down 2.5 percent) and construction (down 1.2 percent). Eight out of the nine manufacturing groups declined, with food, beverage and tobacco manufacturing showing the largest decrease. Service industries were down 0.2 percent in the September 2008 quarter, with the transport and communication, wholesale trade, and retail trade industries making the largest downward contributions.

The expenditure measure of GDP, which is released concurrently with the production measure, was down 0.7 percent in the September 2008 quarter. Household consumption expenditure, which measures the volume of goods and services purchased by New Zealand households, was down 0.2 percent – its third consecutive quarter of decline. Household spending was down for non-durables (which includes food and beverages) and services. Spending on durables (which includes furniture and household appliances) was up this quarter.

Gross fixed capital formation, which measures investment in fixed capital, was down 8.6 percent in the September 2008 quarter. The main driver of this decline was investment in plant machinery and equipment, down 15.6 percent. Other large declines were for investment in residential buildings (down 7.7 percent) and transport equipment (down 18.2 percent). Exports of goods were down 2.6 percent in the September 2008 quarter, with exports of agriculture and fishing primary products and dairy products showing the largest falls. Imports of goods were down 6.6 percent, with imports of machinery and plant the main contributor to the decline.

Geoff Bascand

Government Statistician

23 December 2008

ENDS

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