Economic growth slows more than expected; GDP growth falls to 0.3% in the September quarter, while annual growth falls to 3.0%

Economic growth slows more than expected; GDP growth falls to 0.3% in the September quarter, while annual growth falls to 3.0%

Quarterly economic growth slowed more than expected to its lowest level in nearly five years in September, according to the latest Statistics NZ figures.

Gross Domestic Product (GDP) rose 0.3% in the three months to September, down from 1.0% in the previous quarter.

This is the lowest quarterly growth rate since December 2013.

It is also lower than market expectations and substantially lower than the Reserve Bank's forecast in its November Monetary Policy Statement of 0.7%.

New Zealand's growth rate is akin to that of Australia and slightly worse than the OECD average of 0.5%.

Growth in the September 2018 quarter largely came from the primary sector, which grew by 2.2%.

However digging into the figures, mining had a disproportionately large impact on this growth, increasing by 12% as it started to bounce back from a significant drop in the June quarter caused by an unplanned outage at the Pohokura gas field.

Another part of the primary sector – forestry and logging rose – up 7%, while agriculture activity was down 0.4% after strong growth in the June quarter.

Turning to the services sector, growth here eased to 0.5%. No industries in this sector experienced any strong movements.

Meanwhile growth in goods producing industries fell 1.0%.

The largest contribution to this downturn was manufacturing, with food manufacturing down significantly.

Construction was also down, as repair work for the Kaikoura earthquake wound down.

Turning to annual GDP growth, this rose 3.0% in the year to September – a fall from 3.2% in the previous year and the lowest rate since the year to September 2014.

Looking at it a different way, GDP grew 2.6% from the September 2017 quarter to the September 2018 quarter. 

GDP per capita – a measure Finance Minister Grant Robertson has been particularly keen on boosting – was flat in the September quarter, following a 0.5% increase in the June quarter.

GDP per capita was up 1% in the year to September.

ASB economists expect GDP growth to remain muted in the December quarter, but see things picking up in early 2019. 

"The recent fall in petrol prices will come as a relief to squeezed household budgets (with discretionary spending starting to bounce back) and business confidence has shown tentative signs of improvement in the final month of 2018," they say. 

"The extent of the RBNZ’s concern around today’s outcome will depend on if the RBNZ takes the view that the weak growth over H2 2018 is likely to be temporary or the start of a new trend. 

"Recent data tentatively point to a temporary slowdown.  At this point, we continue to expect the RBNZ to wait until August 2020 before lifting the OCR."

ANZ economists say the RBNZ will need to assess whether economic momentum is (and will remain) consistent with a sustained lift in core inflation to 2% over the medium term.

"And with growth looking like it’s decelerated a little faster over the past year, we remain sceptical," they say. 

"Combined with slowing global growth, wobbly global equity markets, and a cooling housing market, the case is mounting for a more dovish RBNZ stance. No doubt, Q4 core CPI (out 23 January) will be closely watched."

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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I know what to do! Put the OCR up.....
Interest rates locally are going to fall, and fall a long way. Forget the 'offshore cost of funds'. Who's going to be borrowing not only those but anything?!
Powell has done his dash now and Donald has an excuse; someone to blame, as it all turn to custard. Throw in Brexit; Saudi oil; falling asset prices globally and whatever else you want and what do we see? Nothing good from here...


That is a depressing view heading into 2019. Luckly, some housing spruikers will be along shortly to tell us all is well.


...a symptom of an economy over-reliant on ever rising house prices.

and ever increasing debt... otherwise known as a fools paradise!

But debt for one person is credit for another. If I take out a credit card with a $10k limit, withdraw that $10k at an ATM and hand you that $10k then you're $10k richer.

But the minute that impulse to borrow slows down the economy has a very bad case of indigestion, wind and heartburn....

Nic I assume you mean a coronary event. Without credit expansion and a low inflation environment the economy does seem to be coming off the boil.

I did and thanks BadRobot, was obviously typing too fast.. Fun day in the markets has been keeping me distracted

Let me guess.. Retail FX

GDP will improve with an earthquake or two I’m sure
Merry Christmas Kiwis
Rome is burning here The US is pretty sad

Lets look at what the property, precious metals and crypto markets look like at the end of 2019 you might be surprised. Speaking of the latter, look at the weekly gains - bitcoin from $3100 five days ago to $4000 last night, and solid altcoins with weekly gains from 30% to nearly 100%. As for property, it simply isn't allow to fall too much - look at Australia, interest free loans are now back on the menu. Interest rates will also be fascinating in a year when my 3.95% rolls back over - might be a good time for those with mortgages.

How bout we look at the previous 11ish weeks for bitcoin.. where it went from $6700 to $3200...

Pragmatist you’re just plain smart
Crypto currencies are turbulent & hardly a place to park funds unless you can afford to lose a lot
Might as well trade FOREX

"look at Australia, interest free loans are now back on the menu"

Dont think there's anyone doing interest free home loans

Oh haha lol rofl I think we all knew what he meant.

“the lowest quarterly growth since September 2013.” Say no more!

Can't help feeling that Stats NZ are struggling to do their job.

1.0% in the June qtr felt too high, but 0.3% in the Sept qtr feels too low.

Maybe. But I was having drinks last Friday at a Chrissy function, and those retailers I spoke to, who see this as 'their time of the year' would probably say "0.3%.... is still too high!"
TIme will tell...

Retailers always say that business is slow, it's their mantra, they still buy multiple shops be that dairy, service station, or mcdonalds.

Why buy dairy , service station or NcDons ? All terrible investments

The Labour budget assumptions prior to election had NZ GDP growth around 5% at this point...

The rather pedestrian 3% GDP growth will be interjecting a more challenging reality. I really appreciate the pragmatic Robertson, applying a brake on the rather amusing optimism in regards to spending potentials.

At some point it's hard to believe it was anything but electioneering and should be called out as such.

Sadly, it was called out. Unfortunately it was called out in a sound bite headline manner instead of discussing the "why" of the error. One can claim that there is a huge hole in the budget... if an analyst uses the same assumptions embedded in the Labour budget (5% GDP growth and even greater values short term!), then the budget makes sense. The issue is in the baseline assumptions rather than the maths. Anyone conversant with basic accounting principles understood this before the election, unfortunately this fact was sacrificed well prior to the election. I was surprised that there was no coverage about this wildly optimistic budgetary assumption, even on websites dedicated to financial knowledge....

I was one of those screaming about the insane optimism of assuming the highest growth in several generations. pre-election, the media were totally supine on Labour's economic promises, preferring instead to lambast anyone who criticised the obvious flim-flammery it represented (eg joyce) using a few left-aligned economists.

Odds of anyone putting this to the PM during a stand-up before Xmas? Close to Nil.

Kindergartens and primary schools are all finished up for the year today, so unlikely PM will be doing any more public appearances. As a rule she stays away from anything where she might get asked embarrassing questions.

This comment is maybe... just a wee bit... partisan.

I'd recommend pushing the message rather than making snide comments. The party faithful will give you thumbs up or to (the opposite party faithful)make nasty responses. Getting any people that ware possibly evaluating actual data, these few are less likely to consider partisan snide comments. I give high marks to heavyg as even though he is clearly partisan, he was polite in regards to providing data/opinion.

I have seen it reported that in recent months she has set record low attendance for a PM at Question time. Pretty clear evidence she is avoiding challenging interrogations. One can sympathise given accumuling scandals, but part of the job is fronting up.

"The Labour budget assumptions prior to election had NZ GDP growth around 5% at this point"

Yes, but that was when the polls were saying they had no chance of winning the election.

Could the 'credit impulse' be easing perhaps? I think it's time for the housing spruikers to 'step up and borrow' (Governor Orr, Nov 2018) to keep this boat afloat!


John Key has sneaked out of the elevator on the 8th floor grinning on his way out smelling the fart he just left for Labour and the Greens on floor 9. Winston is trying to figure out how to fit a race horse into the lift. There is no motor at the top; The whole system is held up by a rope woven out of fiat bank notes tugged on by chefs, dairy managers and students.
Mr Ian-Les Galloway has the job of removing the chefs, dairy managers and students, or at least appearing to try to do so.
Happy Days.

No one is interested in serious immigration reform. We're almost halfway through the term and NZ First is voting for migration pacts. It was to get them over the line with union nationalist voters and nothing else.

There is definitely a void to be filled by a new party. If only the 5% rule (copied from the fatherland) could be changed. When I see Act or Peter Dunne get through on 0.2% of the national votes, but Colin or Gareth can't get through with an order of magnitude more votes I can only conclude we live in a fake democracy.

We are becoming a third world country. Just the other day I saw a couple who arrived on a visitors visa from Fiji sentenced for pimping out their underage daughter. I mean WTF... why are they still here?

Our population growth is coming mainly from 1) people who couldn't make it into more desirable countries 2) the breeders on the bennies and WFF. That has to have a dysgenic effect over a few generations. How will these simpletons get jobs in an automated economy?

A career in baby farming? No performance reviews, same income regardless of how bad a job you do, and no political will to stop it.

But wait that's not all... ZERO years of training needed. NO qualifications needed. Work from home - no long commute - no expensive inner city housing needed.

Start your baby farm from Hamilton today and receive payments in just nine months. Call 0800 TINDER and ask for Wayne.

But that's no all... Have additional babies* have we'll pay you even more!

* T&C: No father's name required.

C.E.O at Full Time Mummy.

CEO would imply that they could actually manage their children

C.E.O Warren Burrow & O'Hare Ltd

The new sustainable low carbon economy is coming. Wait until -0.3%.

Clearly what we need is another Gaia convulsion, to gin up the construction, engineering, housing, accommodation and hospo sectors just like what Christchurch and Kaikoura experienced. Preferably a NI location, though. We've had quite enough of that down here on the Mainland.

Or perhaps it's (whisper it quietly) Contraction?

The boost from earthquakes is the same as broken window fallacy.

I'm finding that the construction work I deal with is picking up substantially. The vast majority of my work adds to the productive economy.

Good for you.
Because what most property renovators don't realise is that they are fixing broken windows....

I see that our bank economists , have been quick to offer their opinions, yet not one of these plonkers , when given all the data on a plate , stepped out of the box and went low. .
Obviously Massey's real time model needs modelling.

Don't worry! Jacinda will give that all too practiced empathetic look and nod with concern and we can all rest easy that silly things like GDP are not important. The only measure of the success of this government is how kind it is.


Personally, I'd rather the government of whatever party, would change to a zero growth and sustainable future model instead of promising ever more growth. The ever increasing exponential growth model doesn't play well in the long term for a constrained environment. The silly promises for the next few years in order to buy votes... there is a reason why I make disparaging comments about both primary parties (as well as the fringe parties).

Economics is not a zero-sum game. Everyone can win, and get improved standard of living, without necessarily consuming more resources through productivity and efficiency improvements. Eg 200 years ago ~90% of workers were engaged in farming. Now <3%. Energy use by westerners hasn't really increased in 50 years, but our standard of living has improved massively.

Economics, with constant technology, is a zero sum game. With increasing population, zero sum results in a reduced standard of living. The big question is what is the next paradigm shift that will provide the improved standard of living in the future? For the prior two centuries, it was the industrial revolution, coupled with hydrocarbon extraction. What will provide the improvements for the next two centuries? A hint, it will not be electric powered transportation...

What aspects of our standard of living are we still trying to improve? What is the problem with our current standards of living? How is producing/having more stuff, inflating prices, being better servants of the "economic machine" improve these issues?

I believe the next paradigm shift needed is real human evolution, rediscovering our true human nature. What we have now is the careless and destructive use of technological and material progress. Without wisdom we are simply primitive apes reacting to base desires and the influences of external power and control structures/ideology.

I don't hold much hope though.

Your comment is based on a false premise.
Technology is not constant.
During the last generation, it has probably progressed more rapidly than it has done during the entire previous history of mankind.

I agree with your comment about technology increase. The issue is that increasing communications tech doesn't do much for delivering hydrocarbons, or for producing crops. The population has grown far more than the energy and food production has increased from tech increase benefits. Worryingly, a reasonable percentage of the population is changing their diet towards a higher land intensive diet, reducing the food surplus capability even more. In terms of food production, we have already gone rather far along the asymptotic improvement, better iPhones aren't going to help much there.

We need the next paradigm in energy production to occur. At that point, we can say that technology has materially helped.

Lets never mind that this is a typical economic business cycle that should run its course. No, no...expect a further rate cut exacerbating the asset bubble.

Could be. But what if this is the end of The Grand Supercycle?!

"A grand supercycle Wave Five is completing in the 21st century and should be followed by a corrective price pattern of decline that will represent the largest economic recession since the 1700s."

(From that link and from 2006, before this lot got going!)

"JIM: If you were to make your case for deflation right now, what would be the key factors supporting that view?
BOB: The credit bubble: the fact that we do not have currency inflation as much as we have credit inflation. And credit bubbles have always imploded. The amount of dollars out there that are greenbacks – actual cash – is miniscule [sic] compared to the dollar value of credit instruments. So in my view the Fed is utterly powerless to prevent the ultimate deflation of the credit bubble. And some people say, "Well, they can print money." Fine, that would just make the credit bubble collapse faster as soon as bond holders realize that's what they were doing. There's no way out of it.

Just mention CAPITAL GAINS TAX and investors hibernate ............

That's alright Boatman. Owner occupiers can finance their own housing... If only the nimbys, councils, materials cartel, safety compliance ticket clippers would let them.

Let me guess, retail FX..

I think I might start a mental health practice ministering to the needs of contributors on here. I would say Happy Christmas everyone, but I'm not sure that would be well received.

We can assume the property bubble will burst sooner or later. I hope the govt and RBNZ are getting ready for that. They must be fully aware of what's going on in Australia, and that there's a very good chance NZ's market will follow, no matter what they do. It's just been a bubble for too long.

Growth rates of 5%. Pfffft. Sustainable economy equals less emphasis on construction. Given that around 50% gdp comes from this sector, not to mention an enormous amount of tax revenue, and employment, Labour need to tread very very carefully.

Orr is trying his best ensure the property bubble heads for a soft landing. If we have a hard landing then Labour, Winston First, and the Greens will be decimated at the next election.

Just look at what happened yesterday in Australia with the RBA backtracking on the interest only loans. Is this political expediency given the Australian elections are approaching. Couldn’t possibly be political interference? Surely not!!!



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