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NZ economy grows in June quarter

NZ NewswireNZ Newswire 14/09/2016 Paul McBeth

New Zealand's economy grew at a slower-than-expected pace in the June quarter, partly reflecting an upward revision in the first quarter as the nation's massive pipeline of building activity and booming housing market continued to underpin activity.

Gross domestic product grew 0.9 per cent in the three months ended June 30, an unchanged pace from a revised March quarter, Statistics New Zealand said.

That was slower than the 1.1 per cent expansion predicted in a Reuters poll of economists, but ahead of the Reserve Bank's pick of 0.8 per cent.

The economy grew 3.6 per cent from the same period a year earlier, just short of the 3.7 per cent pace economists were projecting.

New Zealand's economy has been bolstered by the construction sector, which is rebuilding the country's second biggest city Christchurch after the 2010 and 2011 earthquakes and trying to fill the shortfall of housing in the biggest city, Auckland.

Construction grew 5 per cent in the quarter, with both residential and commercial activity expanding to meet the level of work required.

That spilled over into other sectors with the demand for building products helping drive a 0.8 per cent expansion in manufacturing and the housing boom supporting 1.3 per cent growth in rental, hiring and real estate services.

"Eleven of the 16 industries were up this quarter, with construction once again providing a boost to production," national senior accounts manager Gary Dunnet says.

The other arm to New Zealand's growth this year has been record levels of tourism and inbound migration, which helped lift retail trade and accommodation services activity 1.9 per cent in the quarter.

Real national disposable income per capita, which measures the purchasing power of the nation's disposable income, shrank 0.1 per cent as the terms of trade declined in the quarter, and was up 0.5 per cent in the year.

On a production measure, primary industries were back in expansionary territory as agriculture, forestry and fishing grew 1.4 per cent, offsetting a 2.5 per cent contraction in mining.

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