NZ March 2013 quarter GDP came in at +0.3% for the quarter, below market expectations of +0.5% and our own expectation of +0.6%. Nevertheless, I find it hard to get too disappointed given that any growth in the quarter essentially banked the large +1.5% in the December 2012 quarter. Annual (production based) growth came in at +2.4% for the year to March, close to expectations helped by upward revisions to previous quarters.
On a sectoral
basis the only real surprise was the March quarter saw more of a hit from the drought
than we expected. The agriculture sector
was down 4.7% over the quarter, mostly driven by lower dairy production. That has me thinking that much of the drought
effect may now be in the numbers, although I’m wary of a further hit in the
agriculture, most sectors were in line with expectations including a significant
9.6% boost in residential construction over the quarter for an overall
construction increase of 5.5%. Pending construction
activity in the form of architectural and engineering services also provided a
boost to Q1 activity and an indication of things to come.
Looking at the
data through an expenditure lens, exports were stronger than expected rising
2.5% in the quarter to be up 8.5% on the year.
Services exports also put in a hefty rise (consistent with yesterday’s current
account data). We wonder about the
sustainability of such a significant increase.
disappointment was the decline in business investment in plant and machinery
equipment which fell 6.2% over the quarter, nearly reversing all of the surprisingly
strong gain in the December quarter. As
we’ve said many times before, a stronger more sustainable New Zealand rate of
growth is highly dependent on export s and business investment. However, robust business confidence gives me
some confidence that business investment will recover in the not too distant
considered, this is not a bad result. At
this stage I am leaving my June quarter forecast at +0.5% for the quarter and
for a move higher in GDP growth in the second half of the year. That will give us annual growth of 2.7% for
the 2013 calendar year. Not bad by
developed world standards.