Statistics New Zealand has just released national accounts figures for the March quarter of 2015, with Gross domestic product (GDP) rising by only 0.2% over the quarter to be up 3.2% year-on-year. The result followed a revised 0.7% rise in the December 2014 quarter.
The result disappointed analysts’ (and the RBNZ’s) expectations of 0.6% growth over the quarter, with the economy growing at its slowest rate in two years.
Primary industries were the main drags on activity, with agriculture down 2.3% due to lower milk production, and mining down 7.8% due to decreased exploration activity, and oil and gas extraction (see below chart).
The expenditure measure of GDP rose only 0.1% over the March quarter, following a revised 1.2% increase in the December 2014 quarter.
The main movers in the expenditure measure of GDP this quarter were:
- household consumption expenditure, up 0.7% due to increased spending on durable goods;
- exports of goods and services, up 1.5% and imports of goods and services were up 1.0%;
- an inventories build up of $106 million, due to agriculture and forestry inventories; and
- investment in fixed assets, down 1.9% due to decreases in machinery and equipment, and intangibles, partly offset by increases in construction investment.
While annual GDP growth remains quite strong, real income growth fell below GDP for the first time since June 2013:
Real gross national disposable income (RGNDI), which measures the real purchasing power of New Zealand’s disposable income, rose 1.1% in the March 2015 quarter, following a revised 0.6% decline in December 2014.
However, over the year to March 2015, RGNDI rose by 2.9%, below real GDP growth of 3.2%.
The main factor dragging down RGNDI over the past year is the recent fall in the terms-of-trade:
Dragged down by falling dairy prices:
Despite the slowdown this quarter, the New Zealand economy is still traveling better than Australia’s. So expect Kiwis to continue flooding back home to the relative economic sunshine of New Zealand. Hell, a few Aussies might even join them.
