New Zealand’s economy is humming, much like its neighbour to the West, Australia.
According to Statistics New Zealand (SNZ), Gross Domestic Product (GDP) rose by 0.7% on a seasonally adjusted production basis in the first three months of the year, topping expectations for a smaller expansion of 0.5%.
Despite the quarterly beat, it was below the 0.9% increase recorded in the final quarter of 2015 and left the year-ended growth rate at 2.4%, slightly below the 2.5% rate seen previously.
SNZ note that construction was the chief driver of the quarterly gain, rising by 4.9%, the fastest expansion seen in two years.
“The increase in construction also reflected higher construction-related investment,” said Gary Dunnet, national accounts manager at SNZ.
“Investment in other construction (infrastructure such as roading and telecommunications) was up 12 percent – the highest quarterly growth since June 2014.
“Investment in residential building rose 4.2 percent, driven by strong increases in Auckland and Waikato, but eased in Canterbury.”
The infographic below, supplied by SNZ, reveals the contribution to growth by individual industry over the quarter, along with the composition of the New Zealand economy.
While on a production basis, growth topped expectations, from an expenditure perspective it underwhelmed.
Gross Domestic Expenditure (GDE) rose by 0.5% over the quarter, following a 0.8% increase in the final quarter of 2015 which was revised down from 1.1%.
Markets had been expecting an increase of 0.6% for the quarter.
Household consumption expenditure, the largest component of GDP, expanded by 0.4%, thanks largely to expenditure on services.
“The production measure of GDP measures the volume of goods and services produced in the economy, while the expenditure measure shows how these goods and services were used, note SNZ.
“While the production-based and expenditure-based measures are both official series, the production-based measure historically shows less volatility and is the preferred series for the quarter-on-quarter changes.”