The economy is continuing to expand at a steady pace, thanks to strong domestic and export demand.
Official figures show the housing market and the construction sector continue to surge. Photo: RNZ / Cole Eastham-Farrelly
Official figures show gross domestic product, which is a broad measure of the health of the economy, grew at a slower than expected 0.9 percent in the three months to June.
That compares with a revised 0.9 percent in the March quarter, and 0.9 percent in the quarter before that.
"Growth this quarter is being driven by strong domestic and export demand," Statistics New Zealand's national accounts senior manager Gary Dunnet said.
The housing market helped propel the economy, as construction surged 5 percent which in turn boosted activity in the manufacturing and services sector.
Glass, cement and concrete production - all components in housing - jumped, while real estate services grew due to the rise in property sales.
Higher investment also reflected more money being pumped into the building of houses.
Household spending rose 1.9 percent, its fastest quarterly pace in seven years, thanks to a rising population, with more people going away, eating out and furnishing their houses.
Exports of kiwifruit were doing well, said ASB Bank economist Nick Tuffley. Photo: Supplied
Strong international demand saw goods exports climb 7.6 percent, its fastest pace in 18 years, driven by dairy products, meat and fruit.
"We're in pretty good heart compared to a few years ago," ASB Bank's chief economist Nick Tuffley said.
"The drivers of the economy do seem a lot more broad-based. We're moved on from an Auckland and Canterbury rebuild and high dairy prices story, to it being a fairly broad-based story and a number of export sector like tourism are doing very well, kiwifruit doing well, the meat sector strong as well."
"It's growth that's spread beyond the main centres - and that's the encouraging thing for New Zealand as a whole," Mr Tuffley said.
Annualised growth rises to 2.8 percent
On an annual basis, average growth rose to 2.8 percent. The size of the economy stood at $252 billion.
When comparing activity in the June quarter with the same period a year ago, the pace of growth jumped to 3.6 percent.
That is more than double the OECD rate of 1.6 percent and compares with 3.3 percent in Australia, 2.2 percent in Britain, 1.2 percent in the United States and 0.8 percent in Japan.
"Despite the tough period the dairy industry has been through, we are in the unusual position of enjoying solid growth, rising employment and real wages at the same time as very low inflation," Finance Minister Bill English said.
But the Labour Party argued growth was being driven by immigration and the benefits were being spread thin.
"When New Zealanders hear the headline GDP numbers they will wonder why they are not feeling the benefits. The answer is because on a per-person basis our economy is barely moving," said Labour finance spokesperson Grant Robertson.
GDP per capita increased 0.5 percent this quarter, following a 0.3 percent increase in the March quarter.
"We have seen enormous population growth in New Zealand in the last year and that generates economic activity", Mr Robertson said. "But what these numbers show is that we are not getting the increased economic value from that to mean real sustainable growth. This adds further to the need to review and adjust immigration policy to ensure it contributes to real growth."
Economists are picking reasonably robust growth to continue, led by housing and tourism.
The ASB's Nick Tuffley said there was strong building demand and still a "fair chunk" of building activity in the pipeline.
"With the tourism sector, the issue is not about demand. It's more about our capacity to keep supplying."
Mr Tuffley warned the export surge was unlikely to be sustained, with inventories being run down, particularly in the dairy sector.