Construction helped New Zealand’s economy grow 0.2% in the June quarter as the country's real purchasing power falls

New Zealand’s economy grew 0.2% in April, May and June with construction the lead contributor, according to the latest gross domestic product (GDP) figures from Statistics NZ.

The latest GDP figure follows an upwardly revised 0.9% GDP figure for the March quarter. This revision to the March quarter was due to updated information from the construction sector.

GDP is NZ’s official measure of economic growth and provides a snapshot of how the economy is performing.

“The 0.2% growth in economic activity in the June 2026 quarter reflected mixed results, with increases in nine out of 16 industries," Statistics NZ’s general manager and macroeconomic spokesperson Jason Attewell said.

The 0.2% figure for the June quarter was above the Reserve Bank’s projection that economic growth would be flat. Before Thursday’s GDP announcement, economists from major banks had forecasts ranging from a 0.1% to 0.3% lift in GDP activity.

The size of the economy was $455 billion for the year ended June 2026.

Impacted by Middle East conflict

Stats NZ said GDP figures for the June quarter were impacted by the Middle East conflict and related fuel price increases.

“Our headline measure of GDP is presented in volume terms, which removes the effect of price changes. However, GDP for some industries related to fuel saw changes which could be attributed to the large increases in fuel prices during the quarter.”

“Increases in quarterly prices for petrol imports were the highest since December 1990, while increases for processed fuels and lubricants were the highest on record,” Stats NZ said.

In retail trade and accommodation, fuel retailing fell in volume terms and was the largest quarterly decline since Covid-19 impacted the September 2021 quarter.

Accommodation and food services fell 3.8% which indicated a potential chance in discretionary spending, Stats NZ said. Alongside this, the restaurants and hotels group in household consumption expenditure fell.

Transport, postal and warehousing fell 1.7% in the June quarter and Stats NZ said this was driven by a decline in road transport.

Meanwhile imports of refined petroleum in constant prices rose 5.3%  compared with the previous quarter, but rose 63.8% in current prices over the same period.

Imports of intermediate goods, processed fuels and lubricants – which includes diesel – in constant prices increased 19.8% in the June quarter compared to the previous quarter. However this rose 123.8% in current prices over the same period.

Construction the largest contributor to overall increase in GDP

Construction was the largest contributor to the quarter's overall increase in GDP, up 2.7%. This was driven by construction services and residential building construction.

Attewell said an increase in residential building activity contributed to the overall growth in the construction industry in the June quarter.

Public administration and safety was up 2.0%, health care and social assistance was up 0.8% and wholesale trade was up 1.3%.

Transport, postal and warehousing, however, was the largest downward contributor to GDP, falling 1.7%. This was due to a drop in road transport and transport support services.

Retail trade and accommodation was also a downward contributor, dropping 1.0%. This was due to a fall in accommodation and food and beverage services.

Per capita up 0.1%, expenditure rises 0.4%

GDP per capita rose 0.1% during the June quarter. Meanwhile the expenditure measure of GDP rose 0.4%, following a 1.1% increase in the March quarter.

Expenditure on GDP rose 2.2% over the year ending in June 2026 compared with the year ending in June 2025.

Gross fixed capital formation had an increase of 1.5% in the June quarter, led by increased spending on residential building work (up 4.4%). Stats NZ said this was reflected in the rise in construction activity over the period.

Exports jumped 2.2% due to an increase in goods exports including meat products which was up 10.3%, other food, beverages and tobacco which was up 7.2% and dairy products  up 3.3%.

“US demand for New Zealand beef contributed to the increase in meat exports in the June 2026 quarter,” Attewell said.

Imports fell 0.8% in the June quarter. Stats NZ said services imports fell 3.7% and this was driven by declines in travel services (down 6.4%) and transport services (down 7.5%).

Downward contributors to expenditure were a change in inventories. This decreased by $289 million and was due to distribution and manufacturing.

Alongside this, central government final consumption expenditure dropped 2.0%, due to intermediate consumption plus taxes on production, social benefits in kind and an increase in sales, with an increase in sales having a downwards contribution to the overall movement.

Household final consumption expenditure was 0.1% in the June quarter compared to 0.6% in the March quarter.

Real purchasing power falls in the June quarter

Compared to the March quarter, real gross national disposable income was down 0.4% and real gross national disposable income per capita fell 0.6%.

For the 12 months to the June quarter, annual real gross national disposable income rose 2.5%, while annual real gross national disposable income per capita increased 1.9%.

Real gross national disposable income measures the volumes of goods and services that New Zealand residents command over – so, real purchasing power of the country’s disposable income, according to Statistics NZ.

This is also impacted by changes in trade, NZ’s net investment income and net transfer flows with the rest of the world.

With real gross national disposable income, Stats NZ said NZ’s ability to buy good and services fell 0.4% in the June quarter.

This was due to an increase in net transfer flows, a decrease in terms of trade and net investment income on our international investments had increased.

In the June quarter, export prices increased 3.5% while import prices rose 13.8% leading to a decrease in the terms of trade.

The decrease means need more exports are needed to pay for a given volume of imports and residents can buy fewer goods and services by volume from the income generated from a given level of domestic production, according to Statistics NZ.

Having a 0.4% decrease in real gross national disposable income along with a 0.2% population increase over the June quarter, led to a decreased gross national disposable income per capita by 0.6%.

In the year to June, real gross national disposable income increased 2.5% while real gross national disposable income per capita rose 1.9%.