Economy Grows Strongly, Up 1.7 Percent

Economy Grows Strongly, Up 1.7 Percent

Economic activity increased strongly this quarter, up 1.7 percent compared with the previous quarter according to information released today by Statistics New Zealand.

This follows growth of 0.9 percent in December 2001 and 1.0 percent in March 2002. The economy grew 3.5 percent for the year ended June 2002.

The key contributor to this quarter's growth was a lift in primary produce exports, with increases in dairy, meat and forestry exports. Overall, exports were up 6.2 percent this quarter and 3.3 percent for the year ended June 2002.

Internal demand was flat this quarter, up only 0.2 percent. There was a further increase in household spending, up 0.4 percent, with spending on major appliances and furniture up this quarter. Household spending has been quite buoyant for the last 12 months, and is up 2.9 percent for the June 2002 year. After the fall last quarter, investment in new housing showed strong growth, up 10.3 percent, and is now back to the level recorded in the December 2001 quarter.

Annually, new housing investment is up 10.7 percent.

There was a small increase in business investment, up 3.2 percent, with expenditure on plant, machinery and equipment being the major contributor, increasing 5.6 percent. This was partly offset by falls in investment in non-residential buildings and transport equipment. There was little change in total inventories this quarter, following the large build-up in each of the last three quarters. This quarter, a run-down in inventories of primary produce destined for export was offset by a build-up in the inventories of other industries.

Following two quarters of flat activity, manufacturing recovered this quarter, increasing 4.3 percent. The increased activity was widespread with most of the manufacturing industry groups recording increases. For the June 2002 year, manufacturing activity was up 0.9 percent.

Primary industries increased 2.6 percent in the June 2002 quarter. Livestock production rose 0.5 percent, and although dairy production was flat this quarter, it increased 5.4 percent for the June 2002 year. Fishing activity declined, with squid catches down from last quarter's high. Forestry increased 4.7 percent, reflecting increases in both export log and saw log removals. Following last quarter's fall, mining and quarrying activity rose sharply, up 16.0 percent, largely driven by increased demand for natural gas used in thermal electricity generation and manufacturing.

The services industries increased 0.6 percent during the June 2002 quarter. Within this group, transport and communication activity declined by 0.2 percent. An increase of 2.5 percent in communication services was more than offset by a 2.7 percent decrease in transport and storage.

Finance, insurance and business services increased 0.9 percent. The main increases continued to come from financial services and real estate activity, with a lift in sales of industrial and commercial buildings this quarter.

The expenditure-based measure of GDP, released concurrently with the production-based measure, recorded a 1.2 percent increase for the June quarter.

Brian Pink Government Statistician

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