GDP grew 1.1% in Sept qtr; Economists had forecast around 0.8%; Annual growth 3.5%; Construction, tourism, transport strong; farming weak

GDP grew 1.1% in Sept qtr; Economists had forecast around 0.8%; Annual growth 3.5%; Construction, tourism, transport strong; farming weak

By Bernard Hickey

Strong construction, tourism and transport sectors help GDP grow a faster-than-expected 1.1% in the September quarter.

Economists had expected growth in output of around 0.8% for the quarter, suggesting the economy is growing faster than anticipated and potentially putting more upward pressure on interest rates. The Reserve Bank had expected quarterly growth of 0.9%. However, downward revisions to previous quarters offset the surprise rise in the September, meaning economists left their forecasts the Official Cash Rate broadly unchanged.

The annual growth of 3.5% was a touch lower than the Reserve Bank's forecast for 3.7% growth because of downward revisions to previous quarters and most still expect the Reserve Bank to hold the Official Cash Rate for an extended period, possibly into 2018. The New Zealand dollar nudged 15 basis points higher in late morning trade to around 69.1 USc.

"From a monetary policy perspective, while these GDP data were somewhat above RBNZ expectations, we assess they are not sufficiently different – particularly once data revisions are taken into consideration - to alter our central scenario for the RBNZ to keep the OCR unchanged at 1.75% over the whole of 2017," First NZ's Director of Economics and Strategy Chris Green said.

Statistics New Zealand revised growth of 0.9% in each of the March and June quarters down to 0.7% per quarter.

Statistics New Zealand reported GDP in the quarter was up 3.5% from the same quarter a year ago, which was a slight acceleration from the 3.4% annual growth rate seen in the June quarter. The 1.1% growth for the quarter was up from 0.7% in the previous quarter and was the fastest quarterly growth since the December quarter of 2015.

The services sector the economy, which represents about 70% of GDP, grew 1.1% in the quarter, while the goods-producing parts of the economy grew 1.3%.

Primary industries fell 0.1% during the quarter. Household spending grew 1.6% for the quarter, having grown 2.0% in the June quarter. Services spending grew 2.0%.

“We’ve seen Kiwis spend more on domestic travel, accommodation, eating out and recreation,” Statistics New Zealand’s Gary Dunnet said.

Per capita GDP grew 0.6% in the September quarter from 0.2% in the June quarter because the population rose 0.5%. GDP per capita rose 0.9% for the year ended September after the population rose 2.1% during the year. GDP per capita in the September was up 1.4% from the same quarter a year ago.

ASB Senior Economist Jane Turner pointed to the annual growth being slightly softer than market and Reserve Bank expectations.

"The lift in growth over the first half of the year wasn’t nearly as impressive as previously thought," Turner said.

"This has implications for the extent the RBNZ can hope for domestically-sourced inflation to lift over the coming year," she said.

"It argues for the RBNZ needs to remain patient for inflation pressures to lift off lows. But does not change our OCR outlook, we continue to expect the RBNZ to leave the OCR on hold at 1.75% for the foreseeable future."

Westpac's Sarah Drought said she expected the Reserve Bank to remain on hold for the foreseeable future.

"The slightly softer starting point for annual growth is balanced against the pick-up in momentum in the September quarter, leaving our outlook for capacity pressures broadly unchanged," Drought said.

(Updated with more detail and reaction)

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?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

79 Comments

Comment Filter

Highlight new comments in the last hr(s).

Any correlation with spending and credit card debt or mortgage debt? If people are spending more, where's the money coming from? Wage increases and people making more, or just good ole debt?

We are making more money than ever before

Money is a claim on energy ... and net energy per capita is in trouble worldwide
So there are more claims ... but they are increasingly worth .. less ... and ultimately worthless.

We just have more people now thus the spending grew up

Yes, GDP is mostly measuring population growth. We need GDP per capita to be the standard measurement. GDP is the most misleading and abused stat ever.

Queue countless posts about GDP being meaningless and GDP per capita, etc.
I'd still rather be in NZ with 3.5% GDP growth than in Greece with none.

Good on ya mate. Yes, I'd also rather be in NZ than Zimbabwe, but comparing ourselves to some basket case country is a bit pointless. Better to compare ourselves to an aspirational standard. Sure 3.5% GDP growth is ok, but surely you'd agree that it'd be better if it was 3.5% per capita, rather than ~1% per capita.

Hey why stop there, how about 25% growth per capita?
The thing is if we didn't have immigration, we wouldn't be growing at 3.5%, in fact with dairy/farming in the toilet it might be 0%

I think the point everyone is making is that GDP growth is pointless without taking into account population growth. If GDP rises by 3% and our population rises by 5% we are all worse off. The media at present is really irresponsible not reporting these two numbers together and pointing out the correlation.

in other words Jimbo, its a population Ponzi scheme - glad you noticed

25% per capita GDP growth would be a great goal, albeit extremely difficult to attain. However, my main beef is that I just don't think that ~1% per capita GDP growth is worth the downsides of the rapid population growth we are experiencing; I think I'd settle for 0% if it meant improvement in non-economic measures of quality of life which I believe are being eroded away at present.

I'm sure there are better metrics to measure the success of government / economy / society. perhaps the following and consider how they're changing as a function of time.
-Gross export revenue / population
-Gross number of new +$70K p.a jobs created or lost.
-% Home ownership rates
-% children in poverty
-% social mobility
-Median lower and upper quartile population's % of income spent on healthcare / education / housing

Harold Mc Millans famous words to the British Parliament are apt :-

"Let us be frank about it: most of our people have never had it so good".

I reckon this applies to most if not all living New Zealanders , and ask if anyone thinks I am wrong?

Of course most of the regular posters think you are wrong

Boatman - Supermac was a One Nation Tory and a Keynesian. Don't try and compare a legendary politician with the detritus that has governed NZ for the past 8 years.

20
up

No doubt correct in a material sense: provided you are happy to sit jammed in traffic for hours each week, a flood of foreign cash denies your 5th generation kiwi kids accessible housing and immigrants eliminate semi skilled work opportunities. And that you are indifferent to the sweeping, irreversible changes to the make up of NZ society that are being imposed on us through rampant immigration. .
Always look on the bright side. We have larger flat screen TV's, shiny new cars and mcmansions for everyone. After all - life does really consist of the abundance of things we possess, eh.

Wheres my mcmansion? i drive a 93 Toyota

you haven't learnt that debt is a friend yet.

Probably hasn't shown up for his free frontal lobotomy yet

he drives a 93 Toyota which is not cool in AKL, so perhaps they took too much.

dont care about whats cool

Anything that is not cool in Auckland I would consider to be the ultimate in cool. Funny that, though, given his name.

Boomers are having a great time...I will leave it at that

I think you mean "infamous". He got walloped in the election, apparently for such sentiments, or so say the textbooks.

Are we still talking about Supermac? Profumo was the "infamous"one. Seems quaint to us over 50 years later that a PM should resign because one of his underlings couldn't keep it in his pants! That secrets had possibly been passed to the Russians through Profumo's trysts was too much for the British public and Mac resigned. There was no 'walloping' in the 64 election for Mac who by then had retired.

Couple of adjustments and I would agree to that statement...

"Let us be frank about it: most of our voting people have never felt like they had it so good".

Huge sections of our society are being left behind, living in overcramped accommodation contracting 3rd world diseases (rheumatic fever, rheumatic heart disease). They don't have it so good.
Some certainly feel like they have it so good, but when big living is based on debt and I-sell-to-you, you-sell-to-me, then all it is not reality. Much like the alcohol and drug addiction problems in our country, there will be a cost, but remember the first one is always free Boatman...

20
up

Yeah I'll disagree..

On paper I’m worth double what I was 8 years ago but I could care less of the "paper value" of my home as I need to live in it – that amount of money still only buys me “1 house in Auckland” - inflation isn’t “wealth”

BUT my quality of life on a day to day level is dropping dramatically in a terrifyingly short period of time (and my partner and I earn an excellent combined income so shudder to think of how those less fortunate get by...)

It hate to see my city of birth, and the city of my children being turned into a slum due to the crazy immigration in both the numbers and the countries targeted.

SO for me in reality I feel much LESS well off in terms of quality of life.

The changes in the last 5 years has been dramatic (overcrowding, 3rd world traffic congestion making simple tasks around Auckland, even on weekends, an absolute nightmare, multi-million dollar corruption from new immigrants, even human trafficking for god’s sake….think about it - HUMAN TRAFFICKING IN NZ - WTF.)

Why can’t people get this? It's staring you in the face.......

Are we that easily blinded by paper wealth?

Or is blind political ideology that means many can’t see the forest through the trees?

Personally I believe we are losing OUR way of life in NZ biggest city - Wake up people, or are we frogs in the pot waiting to boil.

Merry Xmas ............

@mvgsmf ...there are a few on this site who are totally "fixated" on property (especially in Auckland) and "can't see the wood for trees". I have made that comment for years - your current house will only buy you a similar house next door, so who cares if you are living in it, how much it goes up ?

In fact, even if it goes down, it doesn't really matter either .....as long as you haven't mortgaged yourself to the hilt !

I know so many people who say "Great, my house has increased in value $200k in 2 years,so I will buy another one, as the current one is too small etc etc" ...... If house prices were "sensible" the gap between you current house and the one you are aspiring to would be much smaller....but the banks (who are the only "real" winners) love it, as you have to take out a bigger mortgage !!

I have seen it with my own eyes - you describe it perfectly
"city of my birth, and the city of my children is being turned into a slum "
I left 3 years ago for places south

Personally I think Auckland is better now than it was 5 years ago and so much better than it was 20 years ago. Ok the traffic is bad and houses are too dear but both of these could be fixed if we had a government that had any clue.

But it's no where near as good as it was 50 years when you could easily catch a few 10lb snappers in the Waitemata from a dingy after work and have'em home for dinner that evening ;)

please explain how its better than twenty years ago.
what changes can you think off that out weigh the problems of too many people.

So a choice of ethnic eateries outweigh not being able to afford houses and being stuck for hours in traffic. I have to brace myself to visit Auckland, but I have family there so sometimes there is no choice. The rot that has beset Auckland is coming to Hamilton as well. The best time of my life was when I lived where there was 300 or so people in a 50k radius. If you went fishing there, you packed up and went home again if you hadn't caught anything within 10 minutes.

A multi-cultural metropolis such as Auckland is stuck together with the glue of money. It is the common cross-cultural thing that holds it all together and what attracts people to it. However there are plenty of places in NZ where you can get away from this.

But why should I move - my family and roots are here for 100 years - not Shanghai or Mumbai?

Generations of my family have paid taxes and rates towards what is already here

I'll be damned to get squeezed out by those who have never paid a dime to then come in and exploit what the rest of us have built with nary a contribution?

"But why should I move - my family and roots are here for 100 years - not Shanghai or Mumbai?

Generations of my family have paid taxes and rates towards what is already here

I'll be damned to get squeezed out by those who have never paid a dime to then come in and exploit what the rest of us have built with nary a contribution?"

The West's current political and cultural philosophies demand that this happen. 'Diversity is our strength' is the mantra of the liberal elite, parroted by leaders all over the world without a shred of credibility. And they could not care less if you wake up one day and realise you've become a foreigner in your own city. More likely they would consider you a deplorable racist for even broaching such a sentiment. And yet these people have no skin the game because they no longer identify with a particular people, only with their own elite class of transnationalists. Look at Merkel for a good example. She is ruining Germany's future and clearly does not give a damn insofar as she can hold onto power for a while longer.

There is no real end-goal to all of this because these liberal dogmas are not based on reality but are in fact anti-reality. They studiously ignore thousands of years of ethnic conflict for a utopian vision of a multiethnic world where all conflicts have been erased through a blending together of the races. Instead of freeing nations from conflict, this strategy of diversity internalises ethnic and international conflicts within the one nation. There will be no "aha!" moment where it all fits together and we share in the virtue of a quixotic ethnically and religiously diverse yet harmonious and peaceful society. Nowadays all we have left to choose from are the twin dogmas of multiculturalism and free market capitalism, both working to rip formally European societies to pieces before distributing the spoils to any foreigner (with globalism there is no such thing as foreigner) who can get their foot in the door.

Unlike you, I was born and raised in Auckland
I may be blind, but Auckland is no longer a homogenous place held together by a collective commonality

It has become, or becoming, a cluster of enclaves, of seperate ethniticites, each pursuing the allure of the moneypot that definitely does not glue people together

@two other guys - Perfectly said...you nailed it

The sheer numbers of a couple of immigrant groups means the days of assimilation into NZ society for the greater good are gone.

I live on Auckland's North Shore and there are literally suburban enclaves where "getting the NZ way of life" are not required. They are little China's...

It is becoming us and them which cannot be a good thing....

sociologists call them ethnoscapes now as ghettos are for poor people.

Ethnoscapes allow us to recognize that our notions of space, place and community have become much more complex, indeed a ‘single community’ may now be dispersed across a variety of sites. Wikipedia

That's the solution. We have to establish a Kiwi ethnoscape.

Establish a Kiwi Ethnoscape ! Really ! Zac ! Keep your head down with that suggestion. Plenty of the PC brigade will want to cruch you for that. After all this is a country where the government will not let you put your ethnicity as "New Zealander

I wasn't born in Auckland but I was raised here as I was only four when my family arrived here from the UK.
I wasn't claiming that it was a particularly good glue just that it was something held in common.

In the coming years the purpose of the label 'Kiwi' will be to identify people who value inclusiveness, tolerance, and diversity. Inclusiveness - being what it is - denies particularity by warping the venn diagram of cultures and creeds so as to include every one of them under itself. Knowing this, the term Kiwi, being so inclusive and therefore hopelessly vague, will usefully describe nothing more than the civic values I already mentioned.

Yes, mcc. Like much verbiage in the modern parlance: " Spoken by an idiot, full of sound and fury, signifying nothing." Macbeth, Act 5 Scene 5

Pocketaces
A choice of ethnic eateries outweighs not being able to afford houses

Boatman
Financialisation - Financial Services - next comment group down

Iconoclast 17/05/2012
Next time you are in Auckland, take a wander up and down both sides of Queen Street and along Customs Street and observe the number of Chinese hole-in-the-wall foreign-exchange money-movers. They weren't there 15 years ago. They sure as heck aren't changing NZ $20 notes into NZ $5 notes.

Christov 17/05/2012
I can confirm locations in suburbia also iconoclast .....

http://www.interest.co.nz/news/59333/90-seconds-9-am-ecb-cuts-cash-some-...

I agree with you and I don't live there. I have lived in Mt Maunganui since retiring here from Scotland in 2003. I can see this area becoming a mini Auckland with large featureless housing estates,growing traffic problems and not sufficient infrastructure to properly support the growth. Furthermore,All the tradespeople I have spoken to recently(small flood in the kitchen) agree that a lot of very shoddy building work is going up.
My younger son and family live in Meadowbank and their badly built 70s house is now 'worth' around $1.40m. With 2 young children,they would like something bigger and they both have well-paid jobs, but in the area,they would have to pay well over $2m to do so. That is truly insane.
It is verging on criminal that the massive development in places like Pokeno has gone ahead without a rail link. Buses would be useless,given the volume of traffic on the Southern Motorway/parking lot.

Boatman,

You might want to consider that the post-war boom to which McMillan was referring,was precisely that. The boom arose directly from the need to rebuild a shattered country and to rehouse the literally millions who lived in utterly sub-standard housing conditions. Without the war,would there have been that boom? McMillan was a Tory Grandee and knew little or nothing of working class Britain.
I suggest tht you go and read some history and you might have a more nuanced view of the world,including here in NZ. Panglossian is the word that comes to mind. Perhaps you might spend a few hours at say,a City Mission or a Foodbank and just ask people whether 'they have never had it so good'. Then you might follow them back to the overcrowded and uninsulated accommodation they occupy.

Legatum institute's recent prosperity survey supports Boatmans assertion that as 'NZ Inc' we have never had it so good - at least in a material sense.
The extent of Patronage of the city Mission may indicate distribution of said prosperity is unfair but is not evidence that Boatman was incorrect.

Legatum Institute is one of those proliferating right-wing free-market ideologue think-tanks, in this case founded by a private investment firm based in Dubai. The executive director is also a director at JP Morgan, and that's not the only link to make anyone with any sense question their independence.

Massive ideological agenda, pinch of salt.

While the Legatum Institute may well be motivated by some sort of right-wing ideological agenda and NZ being rated #1 doesn't mean there isn't room for improvement it is good to know we are still in the top ten. And the top ten are the usual suspects that you don't really need a fancy pancy Institute based in Dubai to work out for you. I think practically any reasonable person on the planet could confidently say that the best countries are the English speaking British Commonwealth, the Nordic countries and Western Europe.

One thing they have in common and something that I found had noticeably improved in Europe was the acceptance of English as a common language. I really wasted my time learning the odd foreign phrase. I suspect this also has something to do with their success.
Here is an interesting short TED talk on the English mania:

https://youtu.be/ZpILR21GWao

an extra 500 families a week buying cars,houses,furniture,groceries,school uniforms would help.then they would invite other family members to come and appreciate how lucky they are and have a look around.

We are missing a trick , we need to add "Financial Services " to our list of things we do really well , along with playing rugby , milking cows and hosting tourists .

Maybe John Key could use his connections to set us up as a destination for Mutual Fund Managers , Multinational Banks and Insurers , re-insurers , Forex dealers and Pension fund managers .

We have all the ingredients :-
- Stable Government
- Free Market system
- Regulated Banking rules
- Skilled Labour Force
- Ultra Fast Broadband
- Robust Governance , and regulatory oversight
- Efficient and independent Judiciary
- Clear legal framework
- Corruption free environment
- And Auckland is a great place to live and work

What more could anyone ask for ?

Great suggestion. While JK is at it, how about he oversees an extension to the existing foreign student schools so they can offer courses in the said forex dealing, fund manager etc professions. We must need hundreds of thousands more of these people.

This was one of John Key's first ideas on becoming PM - to establish NZ as a settlements house for the global financial industry.

which didn't get implemented because its a stupid idea...

You must be joking

Oh Boatman
Sometimes you are wise, sometimes otherwise - this is not one of your wiser moments

If you had read any of his comments, you would realise 'never wise' is more appropriate..

I think you're all missing the deliberate "sarcasm" from Boatman!

Over the years he has been an ever-enthusiastic cheer-leader of all things National
It is difficult to detect the sarcasm
Definitely a card-carrier

It's a useful metric, but GDP has been for some time authoritatively discounted as a measure of well-being. As the headline in The Economist (30th April, 2016) put it: 'Gross domestic product (GDP) is increasingly a poor measure of prosperity. It is not even a reliable gauge of production'. It's a good article, if you can use this link:

http://www.economist.com/news/briefing/21697845-gross-domestic-product-g...

However, GDP is very useful for governments. It simplifies everything for any government to tell people that GDP is the one measure to watch - that it is the central benchmark of political, economic and social success. The result, though, becomes the pursuit of 'growth' at any cost.

For example, if we measured the success of fisheries by their 'gross product', the oceans would be pretty quickly lifeless. But the fisheries would be recording great successes for a while.

GDP has certain uses, but it'll tell you nothing about environmental degradation, resources depletion, social and individual health (all the externalised, unaccounted and future costs of chasing 'growth'), and GDP even excludes much of the digital economy.

Certainly, many people are doing well in NZ (and no-one wants lower standards of living) but GDP is a very partial way to consider this, and isn't at all helpful in considering sustainability or the future. Indeed if we look ahead, and really want higher standards of living (seen holistically), we might want to consider the other measures of this being originated around the globe.

"Indeed if we look ahead, and really want higher standards of living ..."

This is the master delusion. Standard of living is entirely dependent on energy consumption .... and net energy availability is absolute toast looking into the very near future. People really do think prosperity can somehow be voted in ... !!! to quote ..

"A lot of people aren’t getting what thermodynamic collapse in oil means so to illustrate in 1965 the world was producing 30million barrels a day today, the world is now producing 90million barrels a day. However the net energy that is left over after production has declined from 50% to 18% so in 1965 we had 15million barrels of usable energy and today we have 16.2million barrels. This is less than 10% gain on a 300% increase in effort. 2017 is projected to increase the decline to 14% net energy for us to just stay flat global production will need to increase by 25million barrels a day that is not going to happen."

Good points, ham n eggs. Maybe higher standards of living needn't be viewed as increased material enrichment, increased production and consumption, etc. Perhaps they'll include reductions in such things as non-communicable diseases, environmental degradation, etc. And certainly we'll need a radical change in energy sources, as in much of social organisation. We've been persuaded for a few generations that increased material possession is the benchmark for enhanced human well-being. But they're not the same thing.

Yes i would agree - however the trouble is the financial system doesnt - it doesnt do "backwards". Without a functioning financial system, we can expect chaos.

Nominal annual GDPE for the year ending September 2016 increased 4.45% to $256.360 billion from $245.438 billion. S7 Bank lending over the same period rose 7.34% to $423.139 billion from $394.198 billion.

Nonetheless, annual CPI remained locked down at 0.4% while extraordinary record low OCR levels persistently failed to raise the former.

From a macro view, a sovereign can inflate away the debt if the average interest rate on the debt falls below the growth in nominal GDP. (It doesn’t matter whether it’s volume growth or inflation driving GDP.)
This is how the public-sector deleveraging after World War II was accomplished. In other words covert default. Read more and GDPE - Sep16 stats

Yes SH, and useless, lazy NZ governments, particularly post-MMP have just opened immigration floodgates, debased the NZD and as you say, suppressed interest rates, and built a mountain of private debt - to the advantage of crony banksters.

Moreover, foreign funding agents will be none to pleased if the government persists seeking their benevolence below fair value risk returns. Currently, offshore owners soak up around 68% of our nominal sovereign debt compared to 73% a year ago. View RBNZ table

You echo my own thoughts on GDP. Inflation adjusted per capita income growth is the most important metric to guage a meaningful improvement in peoples material circumstances.

tourism and transport.no wonder caltex is buying gull,apart from snuffing out any pretence at competition,petrol sales have to go up,all those cars sitting in queues on the motorway going nowhere.

Cool. So did immigration

Mvgsmf, you and your partner earn 250k in NZ and you beleive that your standard of living is dropping?
I am sure that you will get alot of sympathy from most on here as to how desperate your plight must be!

Who is asking for sympathy? Not me.

You've completely missed the point and your comment shows how you fail to grasp the difference between "money" and "standard of living" ...some things personal money cant buy eh..you know...traffic, noise, crime...etc etc ?

Haha - unreal................

$ome $people $can $only $understand $omething $if $it $tarts $with $a $ Sign

What happened to the 250 K combined income, it vanished ?

Haha - I removed it, thought it would steer the conversation away from what it's meant to be about... ala "Da Mans" comments.

I only originally put it on to illustrate that even v.good individual money/income can't fix larger community issues like eroding "quality of life" at a macro level - well that's my personal belief in Aucklands case anyway.

Just an opinion...

Quality of life is difficult to measure and therefore little discussed
If you have to move into a gated community, with security a guard, buy a gun, then even an annual household income of $500,000 is little comfort and no compensation for the loss of pleasure that Auckland once was - and no longer is

Humm... It could all go to pot from here ( Well at least for the US).

Trump appoints 'Death by China' author as head of US trade council
http://www.bbc.com/news/world-us-canada-38399712

cj... thks for that link... I'm starting to get a sense of what trump as president means to the mkts.

U might like this by ray Dalio....

https://www.linkedin.com/pulse/reflections-trump-presidency-one-month-af...

Okay y'all , critics, foes and those who think I am crazy :-

Have a blessed and happy Christmas
Dont forget what its really about , our faith as Christians ( well most of us)
Dont get caught up in the consumerism
Dont forget to treat your family with care and compassion
And mote important
Dont forget about those less fortunate than you , and there are many of them among us !