New Zealand GDP rose 0.9% in Q3

New Zealand GDP rose by 0.9% in the September quarter, a bit above market expectations. This partly represents payback for the weaker than expected pace of growth over the first half of this year (June quarter growth was revised down further to 0.3%).

The growth was domestically-focused this quarter, with weakness in agriculture but strong gains across manufacturing and a range of services. The main sour note was an unexpectedly large fall in construction, related to the lumpy civil components.Estimates of growth over 2014 have been revised up by a sizeable amount, with growth over the 2014 calendar year now estimated to be 3.7% (+0.4% on earlier estimates). However, this also reinforces the degree to which the economy's momentum has slowed this year.

Solid GDP growth needs to be seen in the context of very strong population growth. The pace of GDP growth has slowed in per capita terms, and low inflation and rising unemployment indicate that the economy has been operating with increasing spare capacity.