New Zealand sequential GDP growth likely remained unchanged in Q3 2019
New Zealand third quarter GDP growth data is set to release next week. According to a Westpac research report, the economy is likely to have grown 0.5 percent quarter-on-quarter in the September quarter and the gains are expected to have been shared throughout the primary sector, manufacturing and services. The 0.5 percent growth is the same as seen in the prior quarter.
The agricultural sector is likely to have grown 1.6 percent, driven by a rise in milk collections after a slow beginning to the dairying season. This will have also helped to lift food manufacturing, along with a rise in slaughtering to meet Chinese demand for beef and lamb. On the contrary, forestry is expected to have recorded a sharp fall in output, after a mid-year slump in log export prices led to a pullback in harvesting.
Manufacturing sector’s performance was mixed, but the overall activity is likely to have grown 1 percent. Construction rose a bit, with a small drop in homebuilding but further gains in non-residential activity. The electricity sector is expected to be a drag on growth, partially unwinding a solid rise in the second quarter, noted Westpac.
Business related services seem to have been solid overall. Real estate and financial services have accelerated as house sales have begun to recover, and professional and administrative services saw a solid rise in hours worked.
Meanwhile, expenditure measure of GDP is expected to have grown 0.5 percent. This measure gives a useful lens on how New Zealand’s recent economic performance compares with Australia. The Australian GDP figures for September quarter indicated ongoing softness in private sector demand, down by 0.3 percent.
On the contrary, private demand in New Zealand appears to have been solid. Household spending is expected to have grown 1 percent, while investment is likely to have grown 0.9 percent. Government spending is also likely to have contributed positively.
On a year-on-year basis, the GDP growth is likely to have decelerated slightly to 2.3 percent from 3.1 percent.
“However, the extent of that growth slowdown could be even starker, depending on the impact of the annual revisions to the national accounts. Stats NZ has already revealed that the level of nominal GDP will be revised up by 1.7 percent for the year to March 2018. We don’t know how much of that will consist of stronger real activity versus higher prices, but there is some chance that real GDP growth in previous years could be bumped higher as well”, added Westpac.