Economic strength reflected in high Q1 GDP
The rise - of 0.8% of GDP for the March quarter - was well above the consensus forecast of 0.4% and covers the period of the second, and most calamitous, Christchurch earthquake.
It also came at a time when many people were musing about the possibility of a double dip recession.
Today’s result – which was delayed, partly because of the Christchurch earthquake and partly (from last week) because the result was so unexpectedly upbeat Statistics New Zealand staff re-checked the numbers – confounds the pessimists.
Today’s figures also revise the December quarter’s GDP figure, which was recorded at the time as 0.2% but is now 0.5%.
That takes annual GDP to 1.5%.
Although historical, today’s result provides an unexpectedly firm base for what is already shaping up to be a strong second half of the year (see tomorrow’s National Business Review for more).
The largest contributor was manufacturing, where output rose 3.6%, with machinery and equipment manufacturing leading the way. This follows a 3.5% rise in the previous quarter
Primary industry activity actually declined, by 0.6%, mostly due to a 5.3 % drop in mining activity. Forestry and logging fell by a margin-of-effort 0.1%, after a 6.1% rise in the December quarter.
Agricultural output rose 1%, primarily due to a rise in milk production.
The main decline in activity was the construction sector, where output fell 4.3%
Service industry output rose 0.5%, with a 1% rise in real estate and business services being the main contributor. Within this sub-group, a rise in accountancy and legal activity is the main driver, probably due to the usual end-of-financial year rise in activity but also because of the tax changes affecting the property sector which took effect form 1 April.
The crucial area of imports of a capital goods rose by 5.4% for the quarter, which is in line with recent trade and current account data and which also confirms that firms are making use of the combination of a high New Zealand dollar and low interest rates to boost their plant and machinery investment.
The government sector output rose 1.2%, mostly due to continued increases in local government activity, which rose 6.6%, although this time these seem mostly linked to the aftermath of the Christchurch earthquake.