Gross Domestic Product rose by 0.7% in the June quarter, according to Statistics NZ, driven by strong growth in the services sector.
However real gross national disposable income fell for the first time in two years.
The 0.7% rise the June quarter brought GDP growth for the year to June to 3.5%, the highest annual growth figure since the year to September 2007.
The quarterly growth in GDP came in slightly ahead of the consensus of economists' expectations of 0.6%, but below the Reserve Bank's expectations for 0.8%. The annual 3.5% rate was in line with economists' expectations, but again slightly below the 3q.6% expected by the Reserve Bank.
The main driver was a 4.2% increase in business services activity, which was partially offset by a 2.8% decline in agriculture, forestry and fishing.
The construction sector increased by 2.2% for the quarter, mainly due to heavy and civil engineering work.
Retail trade and accommodation were up 1.4%, while wholesale trade was up 2.2% due to machinery and heavy equipment wholesaling.
The expenditure measure of GDP rose 0.5% in the June quarter while domestic demand (spending and investment by New Zealanders) rose by 2.2%, Statistics NZ said.
Household consumption rose 1.3% driven by spending on accommodation, services, telecommunications used motor vehicles and audio visual equipment.
Investment in fixed assets was up 1.5% due to increases in construction and transport equipment.
Imports of goods and services increased 2.9% while exports fell by the same amount.
The size of the economy (in current prices) was $229 billion for the year to June, while GDP per capita was $51,190 for the same period.
Real gross national disposable income, which measures the real purchasing power of New Zealand's disposable income, fell 0.5% in the June quarter, its first fall since since the June 2012 quarter.
The decrease was due to changes to the country's terms of trade, which meant less imports could be purchased with a fixed quantity of exports, Statistics NZ said.
Westpac chief economist Dominick Stephens said in a note on the figures that overall, they backed his view that parts of the economy had experienced a loss of altitude during the second quarter of the year, but the eoverall trend remained robust.
"We expect relatively strong GDP growth over the year or so ahead.
"However the divergence between the very strong domestic economy and the weaker export sector may continue or intensify," the note said.
4 Comments
I got this little message from someone and like to share it.
It shows what GDP is, and it's value in working out "growth" of an economy.
(Excuse the language)
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GDP tracks consumption; it is ridiculous to say that an economy grows when people consume more. This makes sense to even small children who understand that you "grow" or get richer by saving not spending. The following joke perfectly explains the ludicrosity of GDP.Two Keynesian economists, John Maynard Keynes and Paul Krugman, were walking down the street one day when they passed two large piles of dog shit.
Keynes said to Krugman, "I'll pay you $20,000 to eat one of those piles of shit." Krugman agrees and chooses one of the piles and eats it. Keynes pays him his $20,000.
Then Krugman, feeling richer, says, "I'll pay you $20,000 to eat the other pile of shit." Keynes, feeling bad about the money he lost says okay, and eats the shit. Krugman pays him the $20,000.
They resume walking down the street.
After a while, Krugman says, "You know, I don't feel very good. We both have the same amount of money as when we started. The only difference is we've both eaten shit."
Keynes says: "Ah, but you're ignoring the fact that we've increased the GDP by $40,000.
That is really all you need to know about GDP... it's all dogshit.
Except Keynes is a gubbermint man and would have issued a $10,000 tax bill to a nearby worker, and offered them to $9,500 to eat the shit (or be charged interest and have their assets seized until they and their family were homeless)
the poor worker would have to eat the shit, and come up with another 500 to pay off Keynes.
so Keynes is up 10k in his pocket.
the worker still owes the gubbermint $500
and GDP is now 59000 (Hrugman, in 20k, Keynes in 20k, worker in9.5k worker out 9.5k)
Its just a great time to be a Kiwi , and apart from a few cynics , we are mostly optimitistic and confident .
So, dont diss GDP Growth measurements , its the only vaguely reliable measure of an increase in economic activity .
And there is little dispute that we are seeing real solid economic activity , there are staff shortages in many skills , we have execptionally low unemployment , we are spending on good and services , we are importing and exporing and building stuff . Peoples wages are getting paid , and the money is circulating .
The tax take will increase as GST payments increase
Government may even be able to give us a tax break
Its called growing the pie / cake / whatever , and we all stand to gain ( as long as you are working and contributing to this exciting development )
Depending on your world view , it will trickle down or all boats will rise with the rising tide
Its all good for all of us
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