Manufacturing and retail boost Q3 GDP to 0.8%

The New Zealand economy, as measured by gross domestic product (GDP), grew 0.8% in the September 2011 quarter, Statistics New Zealand said today. 

This is higher than market forecasts of a 0.6% rise and follows 0.1% growth in the June quarter. For the year to September 30 the economy grew 1.3%. 

The increase in the latest quarter is the fourth consecutive quarter of growth following a decline of 0.1% in the September 2010 quarter. 

In the September 2011 quarter, the increase in economic activity was due to rises of 0.5% in the services industries, 0.8% in the goods-producing industries, and 0.5% in the primary industries. 

The largest movements in the three months to September 30 came from:

• manufacturing (up 2.3%), mainly driven by a 6.3% increase in food, beverage, and tobacco manufacturing
• retail, accommodation, and restaurants (up 2.5%), the largest quarterly increase in this industry since the March 2007 quarter
• finance, insurance, and business services (up 0.6%), mainly due to business services construction (down 2.2%), the largest fall this quarter.

"Activity in the retail, accommodation, and restaurants industry was certainly boosted by the Rugby World Cup. New Zealanders and visitors to New Zealand both contributed to that rise," Statistics NZ national accounts manager Rachael Milicich says.

He says the big mover in manufacturing was from food, beverage, and tobacco,which had its biggest rise since 2002.

TD Securities' head of Asia Pacific research Annette Beacher says "any strength in this report was always going to be dismissed as a one-off due to the Rugby World Cup temporarily boosting the retail sector and services exports. There will some RWC spillover into the December quarter (the final was held in October) but we fear a return to sub-trend activity thereafter as households continue to hunker down while severe global headwinds continue to buffer commodity prices and confidence."

The New Zealand dollar was little changed on the news, trading just over 77USc.

HSBC economists said the reported growth was solid in Q3, in line with their expectations.

“We still expect a solid end to growth in 2011 as the supply side of the economy bounces back after the quake and the economy is supported by rebuilding in Canterbury and still elevated commodity prices boost incomes. However, global developments present risks to the downside and could impact the speed of the recovery,” they said in a commentary.