GDP figures point to tepid recovery

GROWTH: The economy expanded by 0.2 percent in the September quarter.

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The economy grew weakly in the September quarter, up just 0.2 per cent supported by the oil production sector, in a tepid recovery from the recession which began at the start of last year.

Economic activity remains almost 3 per cent down on the peak two years ago, with the manufacturing and construction sectors still falling, and business investment also down sharply.

Household spending is picking up slowly, especially on big-ticket items like furniture, appliances and cars, which were hammered during the recession.

Economic activity, as measured by gross domestic product (GDP), was up 0.2 percent in the September 2009 quarter, Statistics New Zealand said.

This follows a 0.2 percent increase in the June 2009 quarter. These small increases in economic activity follow five quarters of contraction in the New Zealand economy. In level terms, economic activity during the September 2009 quarter was 2.9 percent lower than in the December 2007 quarter when economic activity last peaked.

"The economy continued to grow slowly in the September 2009 quarter, and the picture across industries was mixed," said National Accounts manager Rachael Milicich. "On the production side of the economy, mining and business services showed the largest increases."

By industry, the largest movements were:

· real estate and business services, up 2.2 per cent, driven by business services

· mining activity, up 11.1 per cent, driven by an increase in both extraction (mainly offshore oil production), and exploration (as measured by metres drilled)

· manufacturing activity, down 1.9 per cent, and now back to the June 1999 quarter level · construction activity, down 4.4 per cent, the sixth decrease in the last seven quarters.

The volume of spending by New Zealand households was up 0.8 per cent in the September 2009 quarter.

Spending on durable goods (big-ticket items such as furniture, appliances, and cars) was up 2.0 per cent, and spending on services also increased.

Household spending on non-durables (which includes alcohol and food) fell 0.8 per cent.

Investment in fixed assets, measured by gross fixed capital formation, was down 1.8 per cent in the September 2009 quarter.

The largest contributors to the decline were plant, machinery, and equipment investment (down 8.0 per cent), other construction, which includes roads and bridges (down 9.3 per cent), and residential building (down 5.0 per cent).

- © Fairfax NZ News