New Zealand: Economic growth steady in Q1 on the back of construction activity
June 19, 2014
In the first quarter, GDP increased a seasonally-adjusted 1.0% over the previous quarter, which matched the revised expansion observed in the fourth quarter (previously reported: +0.9% quarter-on-quarter). The print came in slightly below market expectations of a 1.1% expansion. Compared to the same quarter of the previous year, GDP increased 3.8% in Q1 (Q4: +3.3% year-on-year).
Q1’s expansion was driven by strong growth in construction, which expanded 12.5% in Q1 and came in significantly above the 0.8% growth tallied in Q4. In addition, positive growth was recorded in all other sub-sectors of the economy except for wholesale trade, which fell 1.5% in Q1. After construction, growth rates were the highest in mining and electricity, gas and water. In Q1, mining tallied a 6.5% expansion (Q4: +8.0% qoq) and electricity, gas and water recorded 1.5% growth (Q4: +2.2%).
On an expenditure basis, GDP grew 1.3% over the previous period in Q1, which marked an improvement compared to the 0.7% expansion recorded in Q4. The print mainly reflected an acceleration in government consumption (Q4: -0.5% qoq, Q1: +1.1% qoq) and in fixed investment (Q4: +0.5% qoq, Q1: 2.1% qoq). Conversely, private consumption recorded a flat reading in Q1, which was below the 1.2% expansion observed in Q4. The external sector deteriorated as exports growth fell moderately from 3.5% in Q4 to 3.1% in Q1, while imports grew 1.7% (Q4: +0.1% qoq). Consequently, the external sector’s net contribution to overall economic growth dropped from 1.1 percentage points in Q4 to 0.4 percentage points in Q1.