New Zealand’s economic growth slowed more than economists forecast last quarter amid a drop in manufacturing and farm output, sending the currency toward its steepest weekly decline since May.
Gross domestic product rose 0.2 percent in the three months ended Sept. 30 from the previous quarter, when it expanded a revised 0.3 percent, Statistics New Zealand said in a report released today in Wellington. Growth matched the central bank’s 0.2 percent forecast and was half the 0.4 percent median estimate in a Bloomberg News survey of 13 economists.
The New Zealand dollar fell as traders bet central bank Governor Graeme Wheeler will extend a period of record-low interest rates. Still, sluggish growth may be temporary amid signs of a pick-up in reconstruction in Christchurch and a rise in consumer confidence in the fourth quarter that may revive domestic demand in 2013.
“The economy shifted down a gear,” Mark Smith, senior economist at ANZ Bank New Zealand Ltd. in Wellington, said in an e-mailed note. “With 2013 approaching, the real issue is identifying the drivers of growth outside construction against a fickle global and labor market backdrop.”
New Zealand’s dollar dropped against the U.S. currency after the data. It bought 83.35 U.S. cents as of 11:35 a.m. in Wellington from 83.61 cents immediately before the result. The so-called kiwi has fallen 1.5 percent since Dec. 14.
Statistics New Zealand has introduced new methodology for parts of the GDP series and used new industry benchmarks, resulting in revisions to the whole series. The changes showed New Zealand was in a recession in the second half of 2010, a period when growth was previously reported to have stalled.
Second-quarter growth was revised from a previously reported 0.6 percent as confirmed figures proved more accurate than preliminary indicators in parts of the services industry, officials said. First-half growth was 1.2 percent, down from a previously reported 1.6 percent.
The economy expanded 2 percent in the third quarter from the year-earlier period, the report showed, less than the 2.5 percent growth estimated by economists and the slowest pace in a year. Annual growth slowed from a revised 2.5 percent in the 12 months through June.
New Zealand’s economic recovery has weakened in the second half of 2012 as a global slowdown and rising currency hurt exports, curbed manufacturing and pushed the unemployment rate to a 13-year high of 7.3 percent in the third quarter.
A number of manufacturers “have found it really hard,” Finance Minister Bill English said in an interview yesterday. “We are disappointed with what looks like a softer labor market because that’s the measure for a lot of people of sustainable growth.”
The central bank forecasts growth will slow to less than 2 percent early next year before accelerating to 3.1 percent by the end of 2013. It also predicted annual inflation will remain less than 2 percent over the next two years.
Wheeler held the official cash rate at 2.5 percent earlier this month. Nine of 16 economists surveyed by Bloomberg expect he will raise borrowing costs next year and seven predict no change until 2014.
Manufacturing fell 1.1 percent in the third quarter, led by metal products and food processing, while farm production dropped on less dairy output, today’s report showed.
Construction rose 4.5 percent, led by rebuilding in Christchurch, the country’s third-largest city which was devastated by a series of earthquakes that began in September 2010. The increase was the most since the second quarter of that year.
The expenditure measure of GDP advanced 0.2 percent in the quarter, as a drop in investment offset rising exports, today’s report showed.
Investment declined 4.7 percent as businesses bought fewer fixed assets, primarily plant and equipment, it showed. Residential housing investment rose for a fifth straight quarter, the agency said. Household spending was unchanged.
Exports of goods, which make up 30 percent of the economy, surged 4 percent, led by overseas shipments of milk powder and butter, the GDP data showed. Imports increased 2.6 percent.