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Gross Domestic Product: December 2015 quarter
Embargoed until 10:45am  –  17 March 2016
Commentary

New Zealand economy grows 0.9 percent

Gross domestic product (GDP) was up 0.9 percent in the December 2015 quarter. This follows a 0.9 percent increase in the September 2015 quarter. Growth for the year ended December 2015 was 2.5 percent.

Note: Seasonally adjusted chain-volume series expressed in 2009/10 prices.

The main movements by industry were:

  • business services was up 1.5 percent, due to growth in advertising, market research, and management services
  • construction was up 2.5 percent, and all construction industries increased
  • retail trade and accommodation was up 1.7 percent, due to increases in accommodation; furniture, electrical, and hardware retailing; and food and beverage services
  • agriculture was down 1.7 percent, due to decreased sheep and beef production.

Expenditure on GDP up 1.1 percent

The expenditure method of GDP rose 1.1 percent in the December 2015 quarter, following a revised 1.4 percent increase in the September 2015 quarter.

Note: The expenditure and production measures of GDP are conceptually the same, but use different data sources, so can differ in practice. The production measure of GDP measures the volume of goods and services produced in the economy, while the expenditure measure shows how these goods and services were used. While the production-based and expenditure-based measures are both official series, the production-based measure historically shows less volatility and is the preferred series for the quarter-on-quarter changes.

The main movements in the expenditure measure of GDP this quarter were:

  • household consumption expenditure was up 1.1 percent, due to increased expenditure on restaurants, petrol, and groceries
  • inventories built up $406 million, due to increases in manufacturing and distribution inventories
  • investment in fixed assets was down 1.1 percent, due to decreased investment in plant, machinery, and equipment, and transport equipment
  • exports of goods and services was up 0.3 percent, and imports of goods and services was up 0.7 percent.

Note: Seasonally adjusted chain-volume series expressed in 2009/10 prices.

Growth in service industries reinforced by business services

Service industries grew 0.8 percent in the December 2015 quarter; and 10 of the 11 service industries had increased activity. A 1.5 percent increase in business services was the main driver of the growth in service industries. The increase in business services was driven by increased advertising, market research, and management services, as well as scientific, architectural, and engineering services.

Retail trade and accommodation (up 1.7 percent) also contributed to growth in the service industries.  Accommodation, and furniture, electrical, and hardware retailing were up, reflecting increased household spending, which was up 1.1 percent this quarter.

Graph, service industries, change from September 2015 quarter.

Note: Seasonally adjusted chain-volume series expressed in 2009/10 prices.

Widespread growth in construction

Construction was a key driver of GDP growth this quarter, as residential building, non-residential building, and construction services grew, driving construction's overall growth of 2.5 percent. Value of Building Work Put in Place: December 2015 quarter reported the Auckland region's particularly strong growth in the value of non-residential building activity. Strength in the construction industries was also reflected in greater investment in construction: investment in residential building increased 1.6 percent, and investment in non-residential building increased 3.1 percent.

Note: Seasonally adjusted chain-volume series expressed in 2009/10 prices.

Household consumption expenditure strong

Domestic household spending increased 1.1 percent in the December quarter, the largest quarterly increase since September 2014. The latest growth supported the increases in the retail trade and accommodation industries. Household spending for the year ended December 2015 was up 2.4 percent.

The main movements this quarter were: 

  • Services rose 1.0 percent, due to spending on restaurant and ready-to-eat meals, accommodation, and international air passenger services.
  • Non-durable goods increased 1.1 percent, due to increased spending on petrol, grocery food, and alcohol.
  • Durable goods increased 0.8 percent, due to increased spending on clothing and audio-visual equipment. The increases were partly offset by decreased expenditure on used motor vehicles.

Graph, household consumption expenditure, quarterly change, December 2009 to December 2015 quarter

Investment in capital goods down

Investment in fixed assets was down 1.1 percent in the December 2015 quarter, following a 2.6 percent increase in the September 2015 quarter. The decrease was primarily due to decreased investment in plant, machinery, and equipment, and transport equipment. The decreases were partly offset by increased investment in building construction.

Note: Seasonally adjusted chain-volume series expressed in 2009/10 prices.

Investment in transport equipment was down 11.7 percent, reflecting reduced investment in air transport equipment. The decrease follows a large 29.4 percent increase in the September 2015 quarter, when there were large imports of air transport equipment.

Plant, machinery, and equipment investment decreased 5.7 percent, after increasing in the June and September 2015 quarters. There was less investment in computers in the December 2015 quarter, compared with the September 2015 quarter. Imports of capital goods decreased 6.6 percent in the December 2015 quarter.

RGNDI up 0.4 percent

Real gross national disposable income (RGNDI), which measures the real purchasing power of New Zealand’s disposable income, was up 0.4 percent in the December 2015 quarter. This follows a 0.3 percent increase in the September 2015 quarter. RGNDI per capita decreased 0.1 percent in the December 2015 quarter.

The terms of trade decreased further over the December 2015 quarter, causing the slower growth in RGNDI compared with GDP. Overseas Trade Indexes (Prices and Volumes): December 2015 quarter (provisional) reported a 2.0 percent decrease in the merchandise terms of trade, due to export prices for goods falling more than import prices for goods.

RGNDI increased 1.5 percent for the December 2015 year, compared with an increase of 2.5 percent in GDP over the same period.

Note: Actual chain-volume series expressed in 2009/10 prices.

See definitions for more about RGNDI.

International comparisons

Percentage changes in GDP – international comparisons
Country

Quarterly percentage change in GDP

Change from same quarter previous year
New Zealand 0.9 2.3
Australia 0.6  3.0 
Canada  0.2 0.5
Euro area (19 countries) 0.3  1.6 
Japan -0.3  0.8
OECD 0.3 1.9
United Kingdom 0.5 1.9 
United States 0.3 1.9

For more detailed data see the Excel tables in the 'Downloads' box.

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