All references to quarterly movements are to seasonally adjusted chain-volume series expressed in 1995/96 prices unless otherwise stated.
Slow growth in economic activity
Economic activity as measured by gross domestic product (GDP) increased 0.2 percent in the September 2009 quarter, following a 0.2 percent increase in the June 2009 quarter. These latest increases come after five consecutive quarters of contraction in the New Zealand economy.
On an annual basis, economic activity declined 2.2 percent in the year ended September 2009 compared with the year ended September 2008.
Activity in the primary industries increased 3.9 percent in the September 2009 quarter, following a 1.5 percent increase in the previous quarter. Fishing, forestry, and mining (up 9.2 percent) and agriculture (up 0.9 percent) both increased this quarter.
Activity in the goods-producing industries decreased 2.5 percent in the September 2009 quarter. All the goods-producing industries fell this quarter, with manufacturing (down 1.9 percent) and construction (down 4.4 percent) the main contributors to the decline. Goods-producing industries have now declined 14.0 percent since the December 2007 quarter.
Activity in the service industries was up 0.4 percent this quarter. Increases in finance, insurance, and business services (up 1.2 percent), and in transport and communication (up 1.0 percent) were the main contributors. The overall increase in the services industries was partly offset by decreases in wholesale trade (down 1.6 percent) and government administration and defence (down 1.3 percent).
The expenditure-based measure of GDP, released concurrently with the production measure, was also up 0.2 percent in the September 2009 quarter. Conceptually these two measures are equal. The production measure of GDP shows the volume of goods and services the economy produced, while the expenditure measure shows how those goods and services were used. 'Use' can be consumption (households and government), investment (gross fixed capital formation and change in inventories), or exports. Imports are removed from the expenditure measure of GDP because the New Zealand economy did not produce them.
Household consumption expenditure, which measures the volume of spending by New Zealand households, was up 0.8 percent in the September 2009 quarter. Household spending on durable goods (which includes furniture and appliance retailing, and new and used cars) was up 2.0 percent this quarter. Household spending on services was also up (0.8 percent), while household spending on non-durables (such as alcoholic beverages and retail food) was down 0.8 percent.
Gross fixed capital formation, which measures investment in fixed assets, was down 1.8 percent in the September 2009 quarter. This is the fifth consecutive decline in fixed asset investment. In the latest quarter, the largest declines in investment were for plant, machinery, and equipment (down 8.0 percent), other construction (down 9.3 percent), and residential building (down 5.0 percent). A 24.6 percent increase in investment in intangibles partly offset these declines.
Gross domestic product by industry
Primary industries
Activity in primary industries increased 3.9 percent in the September 2009 quarter following a 1.5 percent increase in the June 2009 quarter. The fishing, forestry, and mining (up 9.2 percent) industry was the main driver of the increase this quarter.
Agriculture activity was up 0.9 percent this quarter. Increased production for sheep and wool was partly offset by a decline in milk production.
Within the fishing, forestry, and mining industry, mining had the largest increase (up 11.1 percent) due to an increase in exploration activity (metres drilled) and extraction (oil and gas production). The increase in extraction activity is related to the Maari offshore oil field, which reached full production in the September 2009 quarter. Exploration activity is measured by metres drilled for mineral exploration. This exploration is included as mining activity whether it is successful or not. The forestry and logging (up 3.9 percent) and fishing industries (up 12.2 percent) also increased this quarter.
Primary industry activity was down 1.2 percent in the year ended September 2009 compared with the year ended September 2008.
Goods-producing industries
Activity in the goods-producing industries fell 2.5 percent in the September 2009 quarter. This decline was mainly driven by manufacturing (down 1.9 percent) and construction (down 4.4 percent). Activity in the electricity, gas, and water industry also declined this quarter (down 1.6 percent).
The 1.9 percent decline in manufacturing activity this quarter was mainly driven by food, beverage, and tobacco manufacturing (down 4.8 percent). This category includes dairy, meat, and other food. The volume of meat products exported fell, while the volume of dairy product exports rose. Other manufacturing declines were in the machinery and equipment (down 2.5 percent) and textile and apparel industries (down 8.0 percent). These declines were partly offset by an increase in wood and paper product manufacturing (up 6.7 percent).
Construction activity declined 4.4 percent in the September 2009 quarter. The largest contributors to the decline were construction trade services (which measures all services to construction activity, including contractors) and residential building. Construction activity has now decreased in six of the last seven quarters, and has declined 19.2 percent since the December 2007 quarter.
Activity in the goods-producing industries was down 9.3 percent in the year ended September 2009 compared with the year ended September 2008. Manufacturing (down 11.2 percent) and construction (down 10.0 percent) both contributed to this decline.
Service industries
Activity in the services industries increased 0.4 percent in the September 2009 quarter. The largest increase in service activity came from real estate and business services (up 2.2 percent). This increase was driven by business services, which includes a diverse range of services used by businesses, such as legal, accounting, technical, and cleaning.
Transport and communication services were up 1.0 percent this quarter, mostly driven by communication services. Personal and community services were up 0.5 percent, mainly due to an increase in health and community services. During the September 2009 quarter, there was some activity related to the H1N1 virus. The Ministry of Health reported an increase in consultation rates for influenza-like illness above the normal winter levels.
Partly offsetting these increases in services were declines in wholesale trade (down 1.6 percent) and government administration and defence (down 1.3 percent). The decline in government activity was mainly due to central government. Central government activity fell 1.7 percent on the production side of GDP, while on the expenditure side, central government expenditure was up 1.0 percent. Education and health, which were the main drivers on the expenditure side of GDP, are separate industries from government on the production side. Retail, accommodation, and restaurant services also declined this quarter (down 0.3 percent).
Activity in the service industries was up 0.8 percent in the year ended September 2009 compared with the year ended September 2008.
Expenditure on gross domestic product
Expenditure on GDP increased 0.2 percent in the September 2009 quarter. For the year ended September 2009, expenditure on GDP decreased 0.8 percent. While the production- and expenditure-based measures are both official series, the production-based measure has historically shown less volatility and is the preferred series for quarter-on-quarter changes.
Households
Household final consumption expenditure increased 0.8 percent in the September 2009 quarter. Household consumption expenditure measures the volume of spending by New Zealand-resident households on goods and services.
Household expenditure on durable goods increased 2.0 percent in the September 2009 quarter. This increase was driven by sales of retail furniture and major appliances, and new and used vehicles. Imports of passenger motor cars also increased, up 18.6 percent this quarter. The increase in household expenditure on durable goods this quarter is the first since the December 2007 quarter. Household expenditure on services increased 0.8 percent in the September 2009 quarter. The main contributors to the increase were domestic and overseas travel.
A 0.8 percent decrease in household expenditure on non-durable goods partly offset the increases in durable goods. Decreased spending on alcoholic beverages and retail food were the major contributors to the decline this quarter.
Household consumption expenditure was down 1.3 percent in the year ended September 2009 compared with the year ended September 2008. Spending on durable goods (down 4.4 percent) and non-durable goods (down 1.1 percent) both declined over the year. An increase in household expenditure on services (up 0.5 percent) partly offset these declines.
Investment in residential building declined 5.0 percent in the September 2009 quarter, its eighth consecutive quarterly decrease. Residential building investment was 23.9 percent lower in the year ended September 2009 compared with the year ended September 2008.
Business investment
Gross fixed capital formation (GFKF), which measures investment in fixed assets, was down 1.8 percent in the September 2009 quarter. GFKF includes business investment (which is discussed in this section) and investment in residential building (which is discussed in the household section above).
Business investment in fixed assets declined 0.9 percent in the September 2009 quarter. Lower investment in plant, machinery, and equipment, and other construction were the largest contributors to the decline.
Business investment in plant and machinery fell 8.0 percent in the September 2009 quarter, the fifth consecutive quarterly fall. The decline in plant and machinery investment this quarter is related to a similar decline in imports of these types of goods.
Other construction declined 9.3 percent in the September 2009 quarter. Other construction consists mainly of infrastructure construction such as roads, bridges, and power plants.
Investment in intangibles was up 24.6 percent in the September 2009 quarter. Investment in intangibles includes software investment and mineral exploration. Mineral exploration is capitalised since the knowledge gained through exploration activities is considered to be productive over a number of years. In the September 2009 quarter, the increase in intangible investment was driven by mineral exploration, which was linked to an increase in exploration activity in the production measure of GDP. Intangible investment for mineral exploration is higher on the expenditure side than the activity measured on the production side of GDP. Transport equipment has increased, rising 10.8 percent in the September 2009 quarter.
For the year ended September 2009, business investment in fixed assets decreased 9.0 percent compared with the year ended September 2008.
Overall, total inventories were run down $748 million in the September 2009 quarter, following a $1.0 billion run down in the June 2009 quarter. The largest run down in the September quarter was in distribution inventories (down $568 million). This run down was due to a reduction in oil stocks held abroad combined with a decline in wholesale inventories. There was also a $316 million run down in manufacturing inventories this quarter. This run down in inventories is consistent with increasing consumer demand and declining manufacturing activity.
Government
General government final consumption expenditure increased 0.4 percent in the September 2009 quarter. Central government expenditure increased 1.0 percent, while on the production side of GDP government activity fell 1.7 percent. Education and health, which were main drivers on the expenditure side of GDP, are separate industries from government on the production side. Local government final consumption expenditure decreased 3.9 percent in the September 2009 quarter.
Government final consumption expenditure was up 2.4 percent for the year ended September 2009 compared with the year ended September 2008.
Exports and imports
Export volumes of goods and services were flat in September 2009 quarter, following a 4.7 percent increase in the previous quarter.
The volume of goods exported decreased 0.2 percent in the September 2009 quarter. The largest declines in export volumes were meat products (down 11.8 percent), other food, beverages and tobacco (down 6.1 percent), and agriculture and fishing primary products (down 5.1 percent). Partly offsetting these declines was an increase in dairy exports (up 4.3 percent).
Exports of services were up 1.3 percent in the September 2009 quarter. Exports of travel services, which measures the volume of spending by overseas visitors to New Zealand, was up 1.2 percent.
Import volumes of goods and services were up 0.7 percent in the September 2009 quarter. The volume of goods imported decreased 1.0 percent in the September 2009 quarter. The main contributor to the decrease in goods imports was the 7.0 percent decrease in imports of capital goods, mainly machinery and plant. This decline in capital equipment imports is consistent with the decline in business investment in these types of goods. Passenger motor cars increased for a second consecutive quarter (up 18.6 percent). These latest increases in passenger motor car imports follow two large declines, and are reflected in the increase in household spending on durable goods, which is where household purchases of new and used vehicles are recorded.
Imports of intermediate goods, such as those used in the manufacturing process, were down 0.5 percent in the September 2009 quarter. Imports of consumption goods were up 0.8 percent, consistent with the 0.8 percent increase in household spending this quarter.
In the September 2009 quarter imports of services increased 7.5 percent. This was mostly from increased imports of travel services, which measures the volume of spending by New Zealand residents while abroad. The increase was due to more New Zealanders travelling abroad this quarter, combined with the appreciation of the New Zealand dollar against our major trading partners.
Export volumes for the year ended September 2009 were down 3.1 percent compared with the year ended September 2008. Import volumes decreased 16.5 percent over the same period.
Real gross national disposable income
Real gross national disposable income (RGNDI) decreased 1.0 percent for the year ended September 2009, while GDP contracted 2.2 percent over the same period. GDP is a measure of economic activity, while RGNDI is a measure of the volumes of goods and services that New Zealand residents have command over. RGNDI takes into account changes in the terms of trade effect (the price of imports relative to the price of exports), and real gains from net investment and transfer income with the rest of the world. The difference between RGNDI and GDP for the year ended September 2009 was mainly due to a reduction in the investment income deficit. The reduction in the investment income deficit for the year ended September 2009 was due mainly to reduced profits by foreign-owned companies in New Zealand.
Implicit price deflators
The GDP implicit price deflator (IPD) for the year ended September 2009 increased 2.0 percent. The GDP IPD is a broad measure of the overall price change for final goods and services produced in New Zealand.
The IPD for gross national expenditure was up 4.2 percent for the year ended September 2009. This provides a broad measure of the overall price change for final goods and services purchased in New Zealand (such as consumer and investment goods).
Revisions
Production measure
- Since the June 2009 quarter release, data for all the industries have been revised due to the incorporation of current price annual industry value added statistics for 2005, 2006, and 2007 (derived from balanced supply-use tables) and the updating of annual chain-linking weights.
- The central government, transport, forestry, and other manufacturing industries have been revised due to updated source data.
Expenditure measure
- All components on the expenditure side have been revised due to the incorporation of nominal expenditure data released in the National Accounts: Year ended March 2009 on 19 November 2009. The chaining-weights have also been revised as a result of this process.
For technical information contact:
Anqi Tan or Jason Attewell
Wellington 04 931 4600
Email: info@stats.govt.nz
Next release ...
Gross Domestic Product: December 2009 quarter will be released on 25 March 2010.