Rather than a quarter of negative growth as some gloomy forecasters had been worried about (such as economists at ASB Bank) New Zealand enjoyed better than forecast economic growth in the three months to June.
Figures released yesterday showed the NZ economy grew by 0.5% during the quarter in seasonally adjusted chain volume terms, topping market forecasts for growth of 0.4%.
Growth in the March quarter remained unrevised at 0.6%.
Despite the better than expected quarter on quarter performance, annual growth slowed (as it did in Australia) to just 2.1% (better than Australia’s 1.4%).
That was down from an upwardly revised 2.7% increase in the year to March.
The quarter on quarter performance belies expectations of a virtual slowdown in the quarter, as some analysts suggested after the Reserve Bank of NZ slashed its official cash rate by half a percent tp 1% at its last meeting in August.
The RBNZ meets next week and will announce its latest monetary policy move on Wednesday.
Stats NZ said the June quarter increase was driven mostly by the service sector which represents about two-thirds of the economy (as in Australia and most developed economies).
They added 0.7% to growth in the quarter after a weak three months in the March quarter.
Stats NZ’s national accounts senior manager Gary Dunnet said the service industries recorded broad-based growth, with eight of the 11 industries showing positive results in the June 2019 quarter.
Household expenditure on services saw a corresponding increase, rising by 0.5%.
Goods-producing industries fell 0.2% in the June quarter, driven by declines in manufacturing and construction. But they had a solid March quarter, so there was a bit of giveback.
Statistics NZ also said the economy in “annual current price terms” hit a milestone during the quarter, topping $300 billion for the first time.
“It took about 14 years for the economy to go from $100b to $200b, and nine years to reach $300b,” Mr. Dunnet said yesterday.