Canterbury rebuild boosts economy

ALAN WOOD
Last updated 11:45 20/12/2012

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Canterbury's residential and non-residential building construction activity helped New Zealand's economy grow 0.2 per cent in the three months to September 30.

The economic activity, as measured by gross domestic product, slowed from the previous June quarter where there was revised growth of 0.3 per cent, Statistics New Zealand said.

The economic activity of 0.2 per cent was much weaker than a median forecast of 0.5 per cent.

Statistics New Zealand said in the third quarter construction was up 4.5 per cent, due to increases in residential and non-residential building, with Canterbury featuring in both those sectors.

The upper North Island also contributed to the growth in residential building activity.However, manufacturing down 1.1 per cent, due to decreases in metal product and food and beverage manufacturing.

Agriculture fell 2.8 per cent in the 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 percent for the year ended September 2012.

Statistics New Zealand said construction activity's rise this quarter was the largest increase since a 7.5 per cent rise in the June 2010 quarter.

This was before the first September 4 Canterbury earthquake.

The main contributor to the latest rise was an increase in construction services, the agency said.

Also up this quarter was residential building construction, led by Canterbury and the upper North Island, and non-residential building construction, which was mainly driven by Canterbury.

The increases in residential and non-residential building construction were reflected in investment in fixed assets on the expenditure measure of gross domestic product.Investment in residential buildings increased 7.4 per cent in the September 2012 quarter, following an increase of 6.2 per cent in the June 2012 quarter.

Partly offsetting these increases was a decline in heavy and civil engineering, which includes infrastructure such as roads and bridges.

Earlier this month the Reserve Bank made a growth projection of just 0.2 per cent in the September quarter.

Earlier this month Reserve Bank governor Graeme Wheeler said 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 at 2.5 per cent till 2014. 

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- © Fairfax NZ News

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