New Zealand: GDP growth picks up pace in the third quarter
GDP growth improved on a seasonally adjusted quarter-on-quarter basis, accelerating moderately to 2.0% in Q3, compared to the previous period’s 1.9% expansion. A recovering tourism industry supported Q3’s reading amid easing Covid-19 restrictions. The figure was more than twice as high as expected by the market.
Household spending declined at a more moderate rate of 0.1% qoq in Q3 compared to a 3.4% contraction in Q2. Meanwhile, public expenditure dropped at the sharpest pace since Q2 2022, contracting 1.4% (Q2: +0.2% qoq), dragged down by lower central government expenditure. Meanwhile, fixed investment bounced back, growing 3.3% in Q3, contrasting the 2.7% contraction in the previous quarter amid rising spending on transport equipment.
In the external sector, exports of goods and services growth waned to 7.8% in Q3 (Q2: +17.2% qoq) amid a strong increase in travel services expenditure. Meanwhile, imports of goods and services bounced back, growing 1.5% in Q3 (Q2: -1.4% qoq).
On a year-on-year basis, economic growth accelerated to 8.3% year on year in the third quarter, from 7.8% in the second quarter, marking the strongest increase since Q4 2021.
Meanwhile, momentum is expected to be slowing during the last quarter of this year. Month-on-month growth in electronic retail card spending was lower in October-November compared to Q3 on average, the manufacturing PMI moved into contractionary terrain in October and remained there in November, and business and consumer sentiment averaged lower in October-November than in Q3.