Strong services sector shows NZ economy can grow despite the drag from dairy

New Zealand's economy grew at a faster pace than expected in the final three months of 2015 on increased activity in business services, a boost in retail and accommodation spending, and renewed construction activity.

Statistics New Zealand data showed that NZ GDP expanded 0.9 percent in the three months ended Dec. 31, the same pace as the September quarter more than the 0.6 percent projected. GDP grew 2.3 percent from the same quarter a year earlier, also ahead of forecast, and expanded at a 2.5 percent rate on an annual average basis.

Service industries underpinned the expansion, with retail trade and accommodation up 1.7 percent, financial and insurance services expanding 1.2 percent, and professional, scientific, technical, administration and support increasing 1.5 percent.

"We are of the view that the RBNZ may take more time to assess the path of inflationary expectations from here after last week’s rushed cut, and push out our expected April cut to June.” said Research Team at TDS