Growth rebounded strongly in the NZ economy in the year to June, hitting a two year high with yesterday’s second-quarter report showing a 1% rise from the three months to March when growth was 0.5%.
The 1% quarter on the quarter rise was the biggest in two years. It means that Australian companies operating in NZ are enjoying good economic conditions on both sides of the Tasman.
For the under pressure banks and insurers such as AMP, Suncorp, and IAG that should be something of a relief. Woolies and Kmart should also be enjoying good sales and returns, as should Qantas, Virgin, and Bunnings.
Economists said there was nothing in the report that would force the Reserve Bank of NZ to alter its current monetary policy stance of sitting pat on interest rates for an extended period of time.
The Reserve Bank had forecast that the economy would grow at 0.5% in the June quarter, with Thursday’s figures likely to lower expectations of an interest rate cut in the near future.
Growth for the year to June was a solid 2.8% (just a bit less than the 3.4% in Australia) which was slightly stronger than the 2.7% rise in the 12 months to March.
According to data from Statistics NZ, released yesterday growth was broad-based, with 15 of 16 industries recording higher production. Mining was the only industry to decline, reflecting one-off factors.
“Once again service industries led growth. Goods-producing and primary industries also saw rises this quarter,” Statistics NZ national accounts senior manager Susan Hollows said.
The largest contribution to growth came from agriculture, up 4.2% as activity in the dairy industry recovered.
The growth of 1.0% in the service industries was broad-based, with all industries recording a lift.
“The real strength of services this quarter lay in a consistent performance across a range of industries,” Mrs. Hollows explained.
Retail trade and accommodation, wholesale, and transport industries all rose, reflecting higher household spending.
Within primary industries, agriculture’s strong performance was supported by growth in forestry.
A 20% fall in mining – its largest fall in 29 years – was due to disruptions to gas production.
“Quarterly growth in agriculture was the strongest since September 2014, with the dairy season ending well after earlier weather disruptions,” Mrs. Hollows said. “An unplanned shutdown stalled gas production, which led to the fall in mining as well as some offset to manufacturing activity.”
Manufacturing was further affected by lower petroleum and chemical product manufacturing following a planned shutdown at Marsden Point refinery.
Growth in electricity generation was the largest in nine years, with a wet and cold late autumn and early winter likely to have influenced both production and demand. That weather continued into the current quarter.
