Preview June Quarter Growth estimated at -0.8%

Data Flash (New Zealand) –

Preview June Quarter Growth estimated at -0.8%

Key Points
Release date: Friday, 29 September, 10.45am (NZT)
Deutsche Bank
forecasts: -0.8% qoq; +4.9% yoy
RBNZ forecast: -0.2% qoq; +5.5% yoy
Market expectations (average so far): -0.3% qoq. Range: -1.0%/+0.2% qoq

qFollowing latest overseas trade and manufacturing sector data, we have revised our estimate of Q2 Production GDP growth to -0.8% qoq. The corresponding forecast for Expenditure GDP is -0.9% qoq.

On a production basis, we expect a negative contribution from the primary sector following a record performance over the year to March. Generally slow domestic demand and weak confidence levels have been behind weakness in the manufacturing and construction sectors, while telecommunications activity has again been the key driver of the service sector.

On an expenditure basis, weak consumer confidence and pressure on household incomes has led to a slowdown in consumption, while a negative investment contribution has largely been driven by a 20% fall in residential investment. Reflecting the comparatively slow development of export sector momentum, the growth contribution from net exports is likely to be negative.

The data will be released only days before the RBNZ's 4 October OCR review. Based on the expected weak result and continued mixed indicators for Q3, the probability of a cash rate move appears close to zero.

Ulf Schoefisch, Chief Economist, New Zealand

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