Business

GDP rises, driven by primary sector

14:09 pm on 18 December 2014

Official figures show gross domestic product, which is a broad measure of the health of the economy, grew 1 percent in the three months to September.

That compares with 0.7 percent growth in the previous quarter.

Statistics New Zealand said activity in the primary sector experienced its strongest growth in 15 years, led by increases in milk production and sheep, beef cattle and lamb farming and mining.

That offset falls in forestry, its third consecutive quarterly decline.

Manufacturing grew 2 percent, driven by rises in metal products, and machinery and equipment.

In contrast, construction activity fell 1.2 percent, led by a decrease in heavy and civil engineering.

Services, which makes up about 70 percent of GDP, rose 0.3 percent, with increases in telecommunications being partly offset by falls in transport and business services.

On an annual basis, the economy grew 2.9 percent, the highest annual growth since March 2008.

When comparing activity in the September quarter with the same period a year ago, the economy grew 3.2 percent.

On the expenditure side of the ledger, GDP grew 1.3 percent.

Household spending, which makes up 60 percent of consumption, rose 1.5 percent, its highest growth rate in three years, with consumers spending more on durable goods like used vehicles, and furniture.

Investment rose 3.5 percent, mainly due to higher spending on plant and machinery, and transport equipment.

Exports fell 0.4 percent, led by logs, while imports rose 0.3 percent.

The size of the economy stood at $237 billion for the year to September.

ANZ Bank senior economist Mark Smith said domestic demand was starting to drive the economy.

"Personal consumption was very, very strong. Now that's consistent with the strength we've seen in consumer confidence, and we also note that consumer confidence has remained very strong going through 'til the end of the year," he said.

"The other major thing, though, was that business investment really came to the party.

"That's a real positive in terms of building supply-side capacity."