New Zealand Q2 GDP Climbs 1.0% On Quarter

New Zealand Q2 GDP Climbs 1.0% On Quarter

New Zealand's gross domestic product expanded a seasonally adjusted 1.0 percent on quarter in the first three months of 2018, Statistics New Zealand said on Thursday.

That beat forecasts for a gain of 0.8 percent and was up from 0.5 percent in the three months prior.

There was broad-based growth, with 15 of 16 industries up.

Agriculture, forestry, and fishing was up 4.1 percent, while mining was down 20 percent, investment spending was down 0.1 percent, GDP per capita was up 0.5 percent and real gross national disposable income was up 0.8 percent.

On a yearly basis, GDP expanded 2.8 percent — again exceeding expectations for 2.5 percent and up from 2.7 percent in Q1.

Favorable weather conditions boosted milk production, which led to a 4.1 percent increase in agriculture, forestry, and fishing in the June 2018 quarter. The increase in milk production comes after consecutive quarters of favorable rainfall and is reflected by increases to both dairy manufacturing and dairy exports in the June 2018 quarter.

Growth in agriculture, forestry, and fishing was further supported by increases in sheep and beef cattle farming, reflected in higher meat exports for the quarter. Meat prices rose 3.6 percent to reach historically high levels. Horticulture and fruit growing, and forestry were also up in the quarter.

The strong growth in agriculture, forestry, and fishing was offset by a 20 percent drop in mining in the June 2018 quarter. The fall — the largest for the industry since 1989 — resulted from an unplanned outage at New Zealand's largest natural gas field, the Pohokura field, after a leaking pipeline was discovered in March.

Goods-producing industries rose 0.9 percent in the June 2018 quarter as electricity and construction each rebounded from falls in the March 2018 quarter. Electricity generation provided the biggest contribution, with above-average hydro lake levels and greater household consumption powering a 3.7 percent increase.

Total manufacturing rose 0.4 percent, with increased transport equipment manufacturing offsetting the fall in petroleum and chemical product manufacturing.

Food manufacturing rose 0.6 percent, with higher dairy and meat manufacturing held back by a fall in beverage and tobacco manufacturing. The fall in beverage and tobacco manufacturing follows a 9.3 percent rise in the March 2018 quarter after large tobacco imports in the December 2017 quarter.

Overall gross fixed capital formation was down 0.1 percent, and business investment (all investment less residential construction) was down 0.2 percent. Residential construction investment increased 0.5 percent, and telecommunication infrastructure investment helped boost other construction. There were also notable increases in investment in transport equipment and software.

Offsetting these increases was a 1.3 percent fall in plant, machinery and equipment investment. This fall follows six consecutive quarters of increase, with growth for the year ended June 2018 up 13 percent.

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