Our take on the latest Gross domestic product (Thu 20 Dec 2018)
NZ economy grew 2.6%pa in the September quarter - the slowest growth in five years
Household spending growth ticked up to 3.3%pa
Government spending growth slumped to 0.4%pa
The key numbers...
- Business investment has slowed further, with firms still uncertain about government policy settings and the global outlook. This slower growth backs up low business confidence and weak investment intentions and reiterates that businesses will need greater certainty before committing to capital spending.
- Although household spending has remained strong, we’re cautious as to how long this may last. Slower population growth and soft consumer confidence could dampen consumer spending growth in the near future.
- We expect government spending growth to switch to a higher gear in 2019, due to more Provincial Growth Fund spending and a coalition determined to increase funding in several core areas.
National economic growth
Production based
...and our reaction
- Capital investment growth slowed to 2.3%pa, the slowest since mid-2017. This slower growth was driven by falls in spending on plant, machinery, and equipment and “other” construction. Softness in the latter area has resulted from the Kaikōura earthquake repairs winding down, but is concerning alongside lacklustre growth in building construction activity.
- Household spending remained firm, up 3.3%pa. Household discretionary spending remains buoyant, with good growth in spending on clothing and footwear (5.0%pa), recreation and culture (3.2%pa), and restaurants and hotels (2.1%pa).
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