Faster than expected growth boosted by construction

  • 22/12/2016
The construction sector is thriving due to the current housing crisis (Getty)
The construction sector is thriving due to the current housing crisis (Getty)

New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services.

New data from Statistics New Zealand revealed gross domestic product (GDP) grew 1.1 percent in the three months ended September 30, accelerating from a revised 0.7 percent pace in the June quarter.

That beat the Reserve Bank's expectations for growth of 1 percent and a 0.9 percent pace predicted in a Reuters survey of economists.

The economy grew 3.5 percent from the same period a year earlier.

Construction continued to feature prominently in the data, expanding 2.1 percent in the quarter and up 12 percent from a year earlier, with both residential and non-residential driving activity in a country facing a mammoth pipeline of work and increasingly stretched capacity.

Statistics NZ said all of the construction's sub-industries expanded in the quarter, reflecting "higher construction-related investment, with continued investment in residential building".

The other arm of New Zealand's growth this year has been on the consumption side as an expanding population and record levels of tourism stoke consumer demand.

Retail trade and accommodation activity expanded 0.9 percent in the quarter, and was 5.7 percent higher than a year earlier.

The country's increasing population has largely been soaked up by employers looking for staff, limiting wage gains in recent years and stifling inflation.

That's also meant per capita growth has been anaemic this year, though Thursday's data showed GDP per capita expanded 0.6 percent in the September quarter and was up 0.9 percent on an annual basis.

The transport sector was also a driver of economic activity, expanding 3.7 percent in the quarter to be 4.7 percent higher than a year earlier, mainly in road and air services.

The country's primary sector was the laggard in the quarter, with agricultural activity shrinking 1.6 percent on lower dairy production and sheep and beef cattle farming.

NZN