Official figures show the housing market and the construction sector continue to surge.
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Expenditure on gross domestic product grew 1.2 percent in the second quarter.
That compares with a revised 0.9 percent in the March quarter, and 0.9 percent in the quarter before that.
Driven by housing, strong demand for exports and immigration, New Zealand now has the third highest growth rate in the OECD. The services sector rose strongly by 0.7 percent, driven by population growth. This industry includes glass, cement, and concrete manufacturing – products used mainly in the construction sector.
Higher investment also reflected more money being pumped into the building of houses. “Household spending was up 1.9 percent, with Kiwis spending more on going away, eating out, and furnishing their houses”.
Exports of kiwifruit were doing well, said ASB Bank economist Nick Tuffley.
The deficit was $945 million in the three months ended June 30, from a revised first-quarter surplus of $1.18 billion, Statistics New Zealand said. And no, this is not about rugby – it’s about economic growth.
“The drivers of the economy do seem a lot more broad-based”.
“At the moment you’ve got a fast growth population and that means you’re going to have per capita income a bit softer”, says Mr English.
The biggest quarter movement was in the services balance, which fell to $587 million in the latest quarter from $2.89b three months earlier, as services exports dropped to $4.8b from $6.9b.
Strong housing activity and Kiwi consumer spending helped drive economic growth of 0.9 percent in the June quarter, Statistics NZ saidearlier today.
Annual inflation was 0.4 percent in the second quarter and has remained below the central bank’s 1.0-3.0 percent target for seven quarters.
“When New Zealanders hear the headline GDP numbers they will wonder why they are not feeling the benefits”.
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“(But) we still believe that low inflation will prompt the RBNZ to cut interest rates to 1.75 percent in November and perhaps 1.5 percent next year”, he said. Residential construction was up 10 per cent over the past year – reinforcing the fact that New Zealand is in the middle of a significant building boom. “This adds further to the need to review and adjust immigration policy to ensure it contributes to real growth”. “It’s more about our capacity to keep supplying”.
