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Economy expands less than expected in Q4

NZ Newswire logoNZ Newswire 15/03/2017 Rebecca Howard

New Zealand's economy expanded less than expected in the fourth quarter, weighed by weaker activity in the primary sector. The kiwi dollar fell.

Gross domestic product expanded 0.4 per cent in the three months ended December 31, following a revised 0.8 per cent increase in the September quarter, Statistics New Zealand said.

Economists had tipped growth quarterly growth of 0.75 per cent in a BusinessDesk poll. The economy grew 2.7 per cent from the same period a year earlier.

"Growth in service industries was partly offset by weaker activity in primary industries also flowing through into manufacturing," national accounts senior manager Gary Dunnet said.

The services sector expanded 0.7 per cent while activity in the primary industries fell 1.0 per cent.

The New Zealand dollar fell to 70 US cents from 70.37 cents immediately before the data release.

Agricultural activity fell 0.6 per cent, due to falling milk production while forestry and logging activity decreased 5.1 per cent and mining activity fell 2.3 per cent in the December quarter.

Activity in goods producing industries fell 0.3 per cent on the quarter, with manufacturing down 1.6 per cent due to decreased food, beverage and tobacco product manufacturing, the statistics agency said. Meat manufacturing and dairy product manufacturing also fell.

Construction activity, however, continued to increase, rising 1.8 per cent in the December quarter. Residential and non-residential building were both up, which was also reflected in an increase in construction trade services.

Services, however, was the main driver of growth in the quarter, with business services activity rising 1.7 per cent and arts, recreation and other services lifting 3.8 per cent.

Activity in the service industries makes up about 70 per cent of GDP, while activity in the primary industries makes up about 10 per cent.

Real gross national disposable income per capita, which measures the purchasing power of New Zealand's disposable income, was up 2.3 per cent in the December quarter.

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