New Zealand economic growth underwhelmed expectations in the final three months of 2016.
According to Statistics New Zealand (SNZ), GDP grew by just 0.4% on a production basis, missing expectations for an increase of 0.7%.
It was the weakest quarterly expansion since the June quarter of 2015. September quarter GDP, previously reported as a gain of 1.1%, was also revised lower to show an increase of 0.8%.
“Growth in service industries was partly offset by weaker activity in primary industries also flowing through into manufacturing,” national accounts senior manager at SNZ Gary Dunnet said.
“At an industry level, growth was a mixed bag, with only half of our 16 industries rising.”
Services industries grew by 0.7%, led by strength in business services, arts, recreation, and other services and health care and residential care.
Offsetting that boost, agriculture production slid 0.6%, largely due to lower milk production.
Goods exports tumbled by 6.0%, the largest quarterly fall since 1992. Dairy exports alone slid by a massive 7.5%. That weakness was partly offset by an increase of 2.1% in services exports, leaving overall exports of goods and services down 3.8%.
“This, coupled with falls in forestry and mining, were reflected in lower manufacturing activity and lower primary exports,” said Dunnet.
Manufacturing production fell 1.6%, driven by falls in food, beverage, and tobacco manufacturing, and in transport equipment, machinery and equipment manufacturing.
On a year-on-year basis, GDP grew by 2.7%, down from the 3.3% pace of the September quarter and well short of expectations for a moderation to 3.1%.
Annual GDP growth came in at 3.1%, up from 2.9% in the prior quarter, but slightly below expectations for an increase of 3.2%.
In current prices, the size of the New Zealand economy was $261 billion.
The undershoot in the December quarter GDP figure, along with the downward revision to the prior growth, has seen the New Zealand dollar fall sharply, seeing the Kiwi give back around half of its post US FOMC gains.
It currently buys .7011, down 0.45% for the session.
The Kiwi is also copping a pasting against the Australian dollar with the AUD/NZD jumping to as high as 1.0996, the loftiest level since April 2016.