New Zealand Q3 GDP preview

In New Zealand, while the primary sector activity seems soft, manufacturing and services are likely to show some strength. The wholesale and manufacturing surveys released this week recorded sizable gains.

These two sectors pulled down the GDP in H1 2015, hence the genuinty of this volatility is doubtful. Westpac forecasts a 0.9% increase in Q3 GDP follows surprisingly weak out-turns of 0.2% in Q1 and 0.4% in Q2.

"Agriculture is likely to be the weakest component this time, reversing its June quarter gains. We estimate that milk production was down 8% in seasonally adjusted terms, reflecting the poor start to spring pasture growth and the increased cow cull due to the low payout expected for this season", says Westpac in a research note. 

The combination of less milk and more beef seems to be positive for food manufacturing, with a lift in fruit and beverages processing.

Retailing had another firm quarter of growth, after being on a brief hold in Q2. Some of this strength will be due to tourist spending, which continued to record major growth in visitor numbers and per person spending last year.

Solid gains were expected elsewhere like transport, because of an observed lift in revenue from road user charges, tele communications, reflecting the risen uptake of uncapped broadband plans, finance and real estate services, reflecting the rise in house buying after the October regulations.