Economic Activity Subdued

Economic Activity Subdued

Economic activity increased 0.2 percent in the June 2003 quarter, following increases of 0.6 and 0.8 percent in the March 2003 and December 2002 quarters, respectively, according to Statistics New Zealand. For the year ended June 2003, the economy grew by 4.0 percent.

Internal demand increased 2.4 percent this quarter. This demand was sustained by higher household expenditure on consumer durables and new housing construction, and a rise in business investment. Internal demand in the June 2003 quarter is now 6.1 percent higher than in the same quarter of the previous year. Household expenditure has been buoyant in the last 12 months, with annual spending on durable goods up 7.6 percent, new housing investment rising 24.8 percent and spending overseas increasing 9.4 percent.

However, much of the increase in internal demand this quarter was met by imports, up 5.5 percent. This, together with a fall in export volumes, down 3.1 percent, resulted in the level of overall economic activity recording a modest increase of 0.2 percent.

Industry production was mixed this quarter. Growth continued to occur in the services industries, which rose 0.5 percent this quarter and are now 3.2 percent higher on an annual basis. There was a further rise in retailing, accommodation and restaurant services, up 1.4 percent, but wholesale activity was down 0.5 percent. With manufacturing down 2.1 percent and electricity, gas and water falling 8.0 percent as a result of the 'power crisis', activity in goods producing industries declined 2.1 percent in the quarter. Activity in the primary industries decreased for the second consecutive quarter, down 2.0 percent.

The expenditure-based measure of GDP, released concurrently with the production-based measure, recorded a 0.1 percent decrease for the June 2003 quarter when compared with the March 2003 quarter.

Brian Pink

Government Statistician

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