All references to quarterly movements are to seasonally adjusted chain-volume series expressed in 1995/96 prices unless otherwise stated.
New Zealand economy grows 0.8 percent
Economic activity as measured by gross domestic product (GDP) increased 0.8 percent in the December 2009 quarter, following a 0.3 percent increase in the September 2009 quarter. This latest increase is the third consecutive quarter of growth in the New Zealand economy.
On the production side of the economy, the major movements by industry were:
- manufacturing activity, up 4.5 percent, after seven consecutive quarters of decline and led by food, beverage, and tobacco manufacturing
- wholesale trade, up 2.7 percent, also increased after seven consecutive quarters of decline
- retail, accommodation, and restaurants, up 1.7 percent
- personal, health, and community services, down 1.1 percent, with cultural and recreation services, and health the major contributors to the decline.
For the year ended December 2009, GDP was down 1.6 percent compared with the year ended December 2008.
The expenditure-based measure of GDP, released concurrently with the production measure, also increased 0.8 percent in the December 2009 quarter. Conceptually these two measures are equal. The production measure of GDP shows the volume of goods and services the economy produced, while the expenditure measure shows how these goods were used. 'Use' can be consumption (households and government), investment (gross fixed capital formation and change in inventories), or exports. Imports are removed from the expenditure measure because the New Zealand economy did not produce them.
The most significant movements in the expenditure measure of GDP this quarter were:
- household consumption expenditure was up 0.9 percent due to higher volumes of durable and non-durable goods purchased by households
- gross fixed capital formation was down 0.9 percent, a large decline in investment in intangibles was partly offset by an increase in plant, machinery, and equipment investment
- inventories were built up by $172 million, following three quarters of run downs, with a build up of manufacturing inventories the main contributor
- exports of goods and services were down 0.9 percent, mainly due to exports of goods, with volumes of dairy products the main contributor to the fall
- imports of goods and services were up 6.0 percent, mainly due to imports of goods, import volumes of capital goods, passenger motor cars, and intermediate goods were the largest contributors.
Gross domestic product by industry
Primary industries
Activity in the primary industries fell 1.3 percent in the December 2009 quarter, following a 3.0 percent increase in the September 2009 quarter. The fishing, forestry, and mining industries (down 5.1 percent) were the main drivers of the decline in primary industry activity this quarter.
Agriculture activity increased 1.1 percent this quarter, with an increase in milk production partly offset by a decline in livestock production.
In the December 2009 quarter, mining activity was down 7.6 percent. A decline in exploration activity in the December 2009 quarter is a result of higher than usual exploration activity in the September 2009 quarter. This lower level of exploration activity is also reflected in lower investment in intangibles, in the expenditure measure of GDP.
For the year ended December 2009, primary industry activity increased 1.2 percent.
Goods-producing industries
Activity in goods-producing industries increased 3.0 percent during the December 2009 quarter, and was mainly driven by an increase in manufacturing activity (up 4.5 percent). Electricity, gas, and water activity also increased (up 2.5 percent), while activity in the construction industry declined (down 0.6 percent).
The 4.5 percent increase in manufacturing activity in the December 2009 quarter is the first quarterly increase in manufacturing activity since the December 2007 quarter. Manufacturing activity in the December 2009 quarter was 16.5 percent lower than in the September 2005 quarter, when manufacturing last peaked. The main contributors to the increase in manufacturing activity were food, beverage, and tobacco manufacturing (up 5.4 percent), metal product manufacturing (up 8.1 percent), and petroleum, chemical, plastic, and rubber product manufacturing (up 6.1 percent).
Construction activity declined 0.6 percent in the December 2009 quarter. A decline in non-residential building was partly offset by an increase in residential building activity. Non-residential building includes some work on the stadiums for the 2011 Rugby World Cup and other commercial and government buildings.
For the year ended December 2009, goods-producing industries declined 8.2 percent. Manufacturing (down 10.4 percent) and construction activity (down 8.0 percent) both declined over this period.
Services industries
Activity in the services industries increased 0.4 percent during the December 2009 quarter. Increases in services activity this quarter were:
- wholesale trade, up 2.7 percent, the first increase since the December 2007 quarter
- retail, accommodation, and restaurants, up 1.7 percent
- transport and communication services, up 0.5 percent, with transport and storage the largest contributor
- government administration and defence, up 1.0 percent, as activity in both central and local government increased
- finance, insurance, and business services activity also increased (up 0.1 percent).
Lower activity in personal, health, and community services (down 1.1 percent) partly offset these increases in the December 2009 quarter. The decline in personal, health, and community services was due to health, and culture and recreation services.
For the year ended December 2009, activity in the services industries increased 0.9 percent.
Expenditure on gross domestic product
Expenditure on GDP increased 0.8 percent in the December 2009 quarter. While the production- and expenditure-based measures are both official series, the production-based measure has historically shown less volatility and is the preferred series for quarter-on-quarter changes. For the year ended December 2009, expenditure on GDP decreased 0.5 percent.
Household consumption
Household final consumption expenditure increased 0.9 percent in the December 2009 quarter. Household consumption expenditure measures the volume of spending by New Zealand-resident households on goods and services.
Household expenditure on durable goods increased 1.4 percent in the December 2009 quarter. The main increases within durable goods were retail furniture and major appliances, recreational goods, and used vehicles. Household expenditure on non-durable goods increased 1.3 percent as spending on alcoholic beverages increased, and was partly offset by a decline in purchases of petroleum products.
Household expenditure on services decreased 0.5 percent in the December 2009 quarter. This is the largest decline in services since the June 2000 quarter. The largest contributors to the latest decline were medical and health, life insurance and recreational admission charges.
For the year ended December 2009, household consumption expenditure fell 0.6 percent. This was a result of decreases in durable goods (down 3.1 percent) and non-durable goods (down 0.1 percent), partly offset by services (up 0.6 percent).
Gross fixed capital formation
Gross fixed capital formation (GFKF) measures investment in fixed assets by households, business, and government.
GFKF decreased 0.9 percent in the December 2009 quarter. This decrease was largely the result of reduced investment in intangible assets (software and exploration), which was down 25.8 percent. This decline follows a large rise in the September 2009 quarter where there was higher than usual exploration activity.
Investment in residential building increased during the December 2009 quarter (up 4.8 percent), while investment in non-residential building declined (down 3.8 percent). Non-residential building investment includes stadium upgrades, and other commercial and government buildings. Other construction (which consists mainly of infrastructure construction) increased 2.6 percent this quarter.
Investment in capital equipment increased for both plant, machinery, and equipment (up 4.1 percent), and transport equipment (up 7.0 percent). The increase in plant, machinery, and transport equipment investment is consistent with the increase in imports of these types of goods, and increased domestic production in the December 2009 quarter.
For the year ended December 2009, GFKF was down 12.2 percent. The main contributors to this decline were investment in transport equipment (down 42.5 percent), plant, machinery, and equipment (down 16.8 percent), and residential building (down 16.8 percent).
Inventories
Total inventories were built up by $172 million in the December 2009 quarter, following a $710 million run down in the September 2009 quarter. This is the first quarterly build up in inventories in the last year. This quarter, manufacturing inventories were built up by $118 million, while distribution inventories were run down by $17 million.
Government
General government final consumption expenditure increased 0.9 percent in the December 2009 quarter, and was up 1.4 percent for the year ended December 2009. Central government expenditure increased 0.7 percent in the December 2009 quarter, driven by education, public order and safety, and defence. Local government final consumption expenditure increased 2.5 percent in the December 2009 quarter.
Exports and imports
Export volumes of goods and services fell 0.9 percent in December 2009 quarter, following a 0.2 percent increase in the previous quarter.
The volume of goods exported decreased 0.3 percent in the December 2009 quarter. The largest declines in export volumes were for dairy products (down 7.1 percent), and agriculture and fishing primary products (down 5.0 percent). Partly offsetting these declines were increases in export volumes for meat products (up 12.4 percent), and other food, beverages, and tobacco (up 11.9 percent).
Exports of services were down 0.3 percent in the December 2009 quarter. Exports of travel services, which measures the volume of spending by overseas visitors to New Zealand, was down 2.8 percent.
Import volumes of goods and services were up 6.0 percent in the December 2009 quarter, following an increase of 1.5 percent in the September 2009 quarter.
The volume of goods imported increased 7.6 percent in the December 2009 quarter, the largest percentage rise since the March 2004 quarter. Imports increased across the board. The main contributor was an increase in imports of capital goods (up 11.5 percent), made up of machinery and plant, and transport and industrial equipment. Imports of passenger motor cars (up 32.2 percent) and intermediate goods (up 4.9 percent) also increased this quarter.
In the national accounts, conceptual adjustments are made to both exports and imports of goods due to change in ownership. These adjustments are the same as those made in the Balance of Payments. For more information about the conceptual adjustments made this quarter, refer to the Balance of Payments and International Investment Position: December 2009 quarter release.
In the December 2009 quarter, imports of services increased 2.8 percent driven by imports of travel services, which measure the volume of spending by New Zealand residents while overseas.
For the year ended December 2009, export volumes were flat, and import volumes were down 14.9 percent.
Real gross national disposable income
Real gross national disposable income (RGNDI) decreased 1.0 percent in the year ended December 2009, while GDP contracted 1.6 percent over the same period. GDP is a measure of economic activity, while RGNDI is a measure of the volumes of goods and services that New Zealand residents have command over. RGNDI takes into account changes in the terms of trade effect (the price of imports relative to the price of exports), and real gains from net investment and transfer income with the rest of the world.
Implicit price deflators
The GDP implicit price deflator (IPD) for the year ended December 2009 increased 1.6 percent. The GDP IPD is a broad measure of the overall price change for final goods and services produced in New Zealand.
The IPD for gross national expenditure was 3.4 percent for the year ended December 2009. This provides a broad measure of the overall price change for final goods and services purchased in New Zealand (such as consumer and investment goods).
Revisions
Production measure
Expenditure measure
For technical information contact:
Robert Korako or Victoria Ward
Wellington 04 931 4600
Email: info@stats.govt.nz
Next release ...
Gross Domestic Product: March 2010 quarter will be released on 24 June 2010.