NZ growth weak, misses forecast

The New Zealand 4Q GDP results were released this morning and looks weak at first glance:

The New Zealand economy, as measured by gross domestic product (GDP), grew by 0.3 percent in the December 2011 quarter, Statistics New Zealand said today. This latest result follows economic growth of 0.7 percent in the September 2011 quarter.

The largest contributors to the increase this quarter, by industry were:

  • finance, insurance, and business services (up 1.3 percent) mainly due to business services such as advertising and management services
  • agriculture (up 3.5 percent), mainly due to an increase in milk production
  • retail, accommodation, and restaurants (up 2.2 percent), following a 2.6 percent rise in the September 2011 quarter. The 2011 Rugby World Cup tournament spanned the September and December 2011 quarters.

Partly offsetting these increases was a fall in manufacturing (down 2.5 percent), mainly due to a decline in primary food manufacturing.

“Growth this quarter was driven by good growing conditions for agriculture, more business services, and spending on the Rugby World Cup,” national accounts manager Rachael Milicich said. “However, weaker manufacturing compared with last quarter dragged the overall result down.”

The expenditure measure of GDP – which measures the use of goods and services in the economy – rose 0.5 percent in the December 2011 quarter.

Household consumption expenditure – which measures the volume of spending by New Zealand resident households – was up 0.8 percent in the December 2011 quarter.

The increase in the volume of household spending was due to increases in:

  • durable goods which includes furniture and major appliances), up 4.0 percent
  • services (which includes air travel), up 0.9 percent
  • non-durable goods (which includes food), up 0.3 percent.

Why is this important – particularly NZ household spending? Because the NZ banks (the four majors – ANZ National, ASB, Bank of NZ and Westpac) are “our” banks. The New Zealand economy is like our own, without the holes, that is, dependent upon its housing sector and is especially worrisome in Auckland, which the Uncoventional Economist has covered previously.

Watching NZ is therefore as important as watching the different speeds of the individual states in the Australian economy.


  1. Did it have the overall contribution to the GDP in the Sept and Dec quarters thanks to the RWC?

  2. Macrodudes,
    How do you view the NZ Labour market, with regard to the inflow of NZ workers to Australia?
    Seems to be at a resonable rate, given the fragile nature of the global economy.
    Do you think this acts a a buffer reservoir against too much inflation in the wages sector of Australia?