Economy grew 0.2pc in September quarter
The economy grew just 0.2. per cent in the September quarter, boosted by construction work, but the result was much weaker than a median forecast of 0.5 per cent.
Today’s Statistics NZ figures also showed the economy was much weaker in the June quarter than first reported, with growth revised down to 0.3 per cent.
The New Zealand dollar dropped on the weaker than expected growth figures, slipping to US83.3c, from about US83.7c earlier this morning.
Construction grew in the September quarter, but more home building and commercial building was offset by less work on things like roads and other infrastructure.
Manufacturing fell and agricultural production dropped, with growing conditions still good, but not as great as earlier in the year.
But economists said the September quarter growth was in line with Reserve Bank expectations and fitted with a widespread view that the three months would mark the low point for the economy for the year.
The economy was expected to pick up in future as the Canterbury rebuild gathered more steam.
Statistics New Zealand said in the latest quarter construction was up 4.5 per cent, due to increases in residential and non-residential building, with Canterbury featuring in both.
Manufacturing was down 1.1 per cent, due to decreases in metal product and food and beverage manufacturing. And agriculture was also down 2.8 per cent, falling this quarter after higher than usual growth in the first six months of the year.
"The growth in the latest quarter was driven by construction," national accounts manager Rachael Milicich said. Economic activity was up 2.5 per cent for the year ended September 2012.
While some economists picked growth of up to 0.6 per cent, other economists predicted it could be zero or even negative.
However, any slowdown in the economy was likely to be short-lived given the Canterbury rebuild, and recently strong building activity figures.
Figures out earlier this month showed building activity increased 9.6 per cent in the September quarter, the biggest three-month jump in a decade.
Earlier this month the Reserve Bank pencilled in growth projection of just 0.2 per cent in the September quarter, after a combined 1.6 per cent in the first half of the year, which was stronger than most expected.
Reserve Bank governor Graeme Wheeler said on December 6 that economic growth had slowed in recent months, with rising unemployment, hitting 7.3 per cent, and low inflation. That pointed to official interest rates remaining on hold till 2014, but with no hint of a rate cut.