All references to quarterly movements are to seasonally adjusted chain-volume series expressed in 1995/96 prices unless otherwise stated.
New Zealand economy grows 0.6 percent
Gross domestic product was up 0.6 percent in the March 2010 quarter, following growth of 0.9 percent in the December 2009 quarter.
In the March 2010 quarter, the growth in economic activity was mainly due to the primary and goods-producing industries, while activity in the services industries remained flat.
The main movements by industry this quarter were:
- Manufacturing (up 1.6 percent). Machinery and equipment, and metal product manufacturing were the largest contributors to the increase this quarter.
- Wholesale trade (up 1.4 percent). This is the second quarter of growth in wholesale trade, following seven quarters of decline.
- Forestry and logging (up 5.3 percent). This activity in logging is related to overseas demand for New Zealand logs, which is reflected in exports of wood products.
- Communications (down 2.0 percent), due to fewer phone call minutes being recorded for both fixed line and mobile phones.
Activity in the March 2010 quarter was up 1.9 percent when compared with the March 2009 quarter. This contrasts with a decrease of 3.1 percent between the March 2008 and March 2009 quarters, when the economy was contracting. Economic activity for the four quarters ended March 2010 was 0.4 percent lower than for the year ended March 2009. This highlights the fact that the economy has not yet returned to the level of activity before the recession.
The expenditure measure of GDP also increased 0.6 percent in the March 2010 quarter. The expenditure and production measures of GDP are conceptually the same. The production measure of GDP measures the volume of goods and services produced in the economy, while the expenditure measure shows how those goods and services were used.
The main movements in the expenditure measure of GDP this quarter were:
- Household consumption expenditure (up 0.2 percent). An increase in the volume of durable goods purchased by households was partly offset by decreases in non-durables, and services.
- Gross fixed capital formation (up 0.8 percent). The largest upward contribution came from investment in intangibles, linked to oil exploration.
- General government expenditure (up 1.7 percent). Most of this increase was due to the acquisition of the HMNZS Otago during the quarter.
Gross domestic product by industry
Primary industries
Activity in primary industries increased 1.7 percent in the March 2010 quarter, following a 0.5 percent decrease in the December 2009 quarter. The forestry, mining, and agricultural industries were the main contributors to the increase in primary industries this quarter.
Fishing, forestry, and mining activity increased 3.2 percent in the March 2010 quarter. The mining industry increased 4.5 percent as a result of coal, oil and gas extraction activity. During the March 2010 quarter, Kupe reached full production; however this was partly offset by a general fall in production across all other oil and gas fields. Forestry also recorded growth in the March 2010 quarter, driven by international demand for logs reflected in the exports in the expenditure measure of GDP. Fishing activity, a small and variable industry, declined 24.5 percent.
Agricultural activity increased 0.8 percent in the March 2010 quarter as a result of increased milk production, partly offset by a decline in livestock production. Dairy production was up this quarter across the country, despite the impact of drought conditions in some regions.
For the year ended March 2010, primary industry activity increased 3.4 percent. This compares with a 1.0 percent decrease for the year ended March 2009.
Goods-producing industries
Activity in goods-producing industries increased 1.0 percent during the March 2010 quarter, following a 3.7 percent increase in the December 2009 quarter. For a second consecutive quarter it was driven by an increase in manufacturing activity (up 1.6 percent).
The largest contributors to the increase in manufacturing activity in the March 2010 quarter were:
- machinery and equipment manufacturing (up 7.7 percent)
- metal product manufacturing (up 7.2 percent)
- petroleum, chemical, plastic, and rubber product manufacturing (up 3.6 percent). This is reflected in increased exports of these types of products.
The only significant decrease in manufacturing activity was in food, beverage, and tobacco manufacturing (down 2.5 percent).
It is important to note that differences between the GDP measure of manufacturing and the Economic Survey of Manufacturing (QMS), are due to the non-standard quarter in QMS for primary food manufacturing. For example, GDP in a March quarter includes primary food values for the months of January, February, and March; but in QMS the March quarter includes values for the months December, January, and February.
Activity in the construction industry increased (up 1.0 percent), following a 0.1 percent increase in the December 2009 quarter. This is the second quarter of growth in construction activity, following seven quarters of decline. Electricity, gas, and water activity decreased 2.2 percent in the March 2010 quarter.
For the year ended March 2010, goods-producing industries declined 5.7 percent, the same decrease as for the year ended March 2009.
Services industries
Activity in the services industries remained flat during the March 2010 quarter, as a result of a mixed picture across the category's industries. This follows a 0.3 percent increase in the December 2009 quarter.
Of the industries with increased activity, rises were recorded in:
- wholesale trade (up 1.4 percent). This is the second quarter of growth in wholesale trade following seven quarters of decline. One of the main contributors to growth in wholesale trade this quarter was motor vehicles.
- personal and community services (up 0.3 percent); an increase in health services was partly offset by reduced activity in culture and recreation.
Decreased activity in the March 2010 quarter was seen in:
- retail, accommodation and restaurants (down 0.8 percent)
- government administration and defence (down 0.6 percent)
- finance, insurance and business services (down 0.2 percent)
- transport and communication (down 0.1 percent).
The decrease in transport and communication was a result of a decrease in communication activity arising from lower call volumes, partly offset by an increase in transport and storage activity.
For the year ended March 2010, services industries increased 1.1 percent, compared with a 0.5 percent increase for the year ended March 2009.
Expenditure on gross domestic product
Expenditure on GDP increased 0.6 percent in the March 2010 quarter, following a 0.9 percent increase in the December 2009 quarter. While the production-based 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 March 2010, expenditure on GDP increased 0.5 percent, compared with a 1.0 percent decrease for the year ended March 2009.
Household consumption
Household final consumption expenditure increased 0.2 percent in the March 2010 quarter. Household consumption expenditure measures the volume of spending by New Zealand-resident households on goods and services. The increase this quarter is the fourth consecutive quarterly increase for household consumption expenditure and follows a rise of 0.8 percent in the December 2009 quarter.
Household expenditure on durable goods increased 2.0 percent in the March 2010 quarter. This increase was driven by higher sales of retail furniture and major appliances, as well as used vehicles, and clothing and footwear. This is the third consecutive quarter where spending on durables has increased, with retail furniture and major appliances being a significant driver in each of these quarters. Expenditure on used vehicles has increased for the past four quarters, and is reflected in increased imports of passenger motor cars over the previous three quarters.
Decreased household expenditure on both non-durable goods (down 0.7 percent) and services (down 0.1 percent) partly offset the rise in durable goods this quarter. Decreased spending on retail food and petroleum products were the major contributors for the decline in non-durable goods.
The fall in services expenditure was driven by decreased spending on life insurance, fixed line and mobile telephone calls, and public education. The decline in household expenditure on services this quarter followed a drop of 0.6 percent in the December 2009 quarter, and is the first time that services expenditure has fallen in two consecutive quarters since the June 1991 quarter.
For the year ended March 2010, household consumption expenditure increased 0.5 percent, the first rise since a 0.8 percent increase in the year ended September 2008. The latest rise was a result of increased spending on non-durable goods (up 0.4 percent) and services (up 0.7 percent). A decline in household expenditure on durable goods (down 1.0 percent) partly offset these increases.
Gross fixed capital formation
Gross fixed capital formation (GFKF) measures investment in fixed assets by households, business, and government.
GFKF increased 0.8 percent in the March 2010 quarter. This rise was mostly due to increased investment in intangibles (up 10.3 percent), driven mainly by increased exploration activity. This increase is also reflected in the increased exploration activity on the production side, where mining rose 4.5 percent. A 2.5 percent rise in other construction, which mainly consists of infrastructure construction such as roads and bridges, also contributed this quarter.
Investment in non-residential building (down 3.5 percent) and transport equipment (down 3.1 percent) partly offset the rise this quarter.
Investment in residential building increased 0.5 percent in the March 2010 quarter, following a 4.7 percent increase in the December 2009 quarter.
For the year ended March 2010, GFKF was down 9.5 percent. The main contributors to the decline were plant, machinery and equipment (down 16.1 percent), and transport equipment (down 23.8 percent).
Business investment in fixed assets increased 0.9 percent in the March 2010 quarter, following two consecutive quarters of decline. Business investment consists of GFKF less residential buildings. This quarter's increase was driven by the rise in intangible investment and investment in other construction. For the year ended March 2010, business investment in fixed assets decreased 8.9 percent.
Inventories
Total inventories were built up by $143 million in the March 2010 quarter, following a build-up of $221 million in the December 2009 quarter. The build up this quarter was largely due to an increase of $95 million for distribution inventories. A $53 million run-down for agriculture inventories partly offset the increases.
Government
General government final consumption expenditure increased 1.7 percent in the March 2010 quarter, the largest increase since the March 2008 quarter.
Central government expenditure increased 1.9 percent in the March 2010 quarter, driven by the acquisition of the $93 million offshore patrol vessel HMNZS Otago. With the offshore patrol vessel excluded, central government expenditure increased 0.8 percent, driven by increases in central government administration and education. Local government final consumption expenditure declined 0.5 percent in the March 2010 quarter.
Education and health are included in government consumption on the expenditure side, while they are separate industries on the production side of GDP.
For the year ended March 2010, general government consumption expenditure was up 1.4 percent.
Exports and imports
Export volumes of goods and services increased 1.4 percent in the March 2010 quarter, following a 0.7 percent decrease in the previous quarter.
The volume of goods exported increased 3.4 percent in the March 2010 quarter. A 5.7 percent increase in export volumes of metal products, machinery, and equipment was the largest contributor. Increased exports reflected higher manufacturing activity for both metal products (up 7.2 percent) and machinery and equipment (up 7.7 percent) in the March 2010 quarter.
Exports of agriculture and fishing primary products (up 6.9 percent) also contributed to the increase in goods exported this quarter. Exports of forestry primary products also rose this quarter (up 2.2 percent) due to strong international demand for logs during the year. This increase was reflected in the growth in production activity for forestry and logging, as shown in the production measure of GDP. Partly offsetting these increases was a decline in export volumes for other food, beverages, and tobacco (down 2.9 percent).
Exports of services declined 2.4 percent in the March 2010 quarter. Exports of travel services, which measures the volume of spending by overseas visitors to New Zealand, was down 4.3 percent.
Import volumes of goods and services were up 1.8 percent in the March 2010 quarter, following a 5.8 percent increase in the December 2009 quarter.
The volume of goods imported rose 1.9 percent. The main contributor to the increase in imports of goods was a 4.2 percent increase in consumption goods. The acquisition of the $93 million offshore patrol vessel HMNZS Otago also contributed to the increase in import volumes, with military and other goods up $95 million. This is reflected in the increase in central government final consumption expenditure, which is where the spending on the offshore patrol vessel is recorded.
Partly offsetting these increases was a 12.4 percent fall in imports of passenger motor cars. This fall follows strong increases in import volumes of passenger motor cars over the previous three quarters. Household expenditure on both new and used cars increased in the March 2010 quarter, reflecting stronger demand. Fewer imports of passenger motor cars were required this quarter to meet the demand as distribution inventories have been built up over the past two quarters. Imports of capital goods also fell, down 2.8 percent, mainly due to a decline in transport and industrial equipment imports. Investment in transport equipment also declined this quarter, as reflected in gross fixed capital formation.
In the March 2010 quarter imports of services were up 0.6 percent, mainly due to a rise in transport services.
For the year ended March 2010, export volumes increased 2.9 percent while import volumes were down 9.6 percent.
Real gross national disposable income
Real gross national disposable income (RGNDI) increased 1.2 percent in the year ended March 2010, while GDP contracted 0.4 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 March 2010 increased 1.3 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 up 2.3 percent for the year ended March 2010. 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
- Non-residential building estimates for the December 2009 quarter have been revised due to updated respondent data for building work. This revision is to both the construction industry on the production measure of GDP, and to investment in non-residential building on the expenditure measure of GDP. The revision was not included in the Quarterly Building Activity Survey results.
- Revisions to the non-building measure of construction, which includes road and bridge construction, have occurred due to updated use of source data. These revisions affect the quarters June 1993 to December 2009.
- The agriculture industry has been revised due to the incorporation of updated March year benchmarks, and updated source data. The largest impact of these revisions is in the December 2009 quarter.
Expenditure measure
- Revisions have been made to gross fixed capital formation and manufacturing. In the June 2009 quarter, four inshore patrol vessels (IPVs) built in New Zealand were delivered to the New Zealand Navy. The purchase of these vessels is now included in government gross fixed capital formation in the June 2009 quarter, while an offsetting revision was also made to reduce manufacturing inventories in the same quarter. The manufacturing activity associated with the construction of these vessels was included in GDP, but further revisions have been made to manufacturing inventories to better reflect the build-up of work in progress inventories while these ships were being built. These revisions bring the accounts into line with the SNA93 treatment of these transactions.
- Manufacturing inventories have also been revised due to updated information from the Economic Survey of Manufacturing.
For technical information contact:
Robert Korako or Victoria Ward
Wellington 04 931 4600
Email: info@stats.govt.nz
Next release ...
Gross Domestic Product: June 2010 quarter will be released on 23 September 2010.