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Economic growth bigger than expected

NZ Newswire logoNZ Newswire 21/12/2016 Paul McBeth

New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services.

Gross domestic product grew 1.1 per cent in the three months ended September 30, accelerating from a revised 0.7 per cent pace in the June quarter, Statistics New Zealand said on Thursday.

That beat the Reserve Bank's expectations for growth of 1 per cent and a 0.9 percent pace predicted in a Reuters survey of economists. The economy grew 3.5 per cent from the same period a year earlier.

Construction continued to feature prominently in the data, expanding 2.1 per cent in the quarter and up 12 per cent from a year earlier, with both residential and non-residential driving activity in a country facing a mammoth pipeline of work and increasingly stretched capacity.

Statistics NZ said all of the construction's sub-industries expanded in the quarter, reflecting "higher construction-related investment, with continued investment in residential building".

The other arm of New Zealand's growth this year has been on the consumption side as an expanding population and record levels of tourism stoke consumer demand. Retail trade and accommodation activity expanded 0.9 per cent in the quarter, and was 5.7 per cent higher than a year earlier.

The country's increasing population has largely been soaked up by employers looking for staff, limiting wage gains in recent years and stifling inflation.

That's also meant per capita growth has been anaemic this year, though Thursday's data showed GDP per capita expanded 0.6 per cent in the September quarter and was up 0.9 per cent on an annual basis.

The transport sector was also a driver of economic activity, expanding 3.7 per cent in the quarter to be 4.7 per cent higher than a year earlier, mainly in road and air services.

The country's primary sector was the laggard in the quarter, with agricultural activity shrinking 1.6 per cent on lower dairy production and sheep and beef cattle farming.

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