Spending up on petrol, restaurants and grocery shopping

Thursday, 17 March 2016

Cheaper petrol prices may be prompting New Zealanders to drive more.

Consumer confidence and tourists splashing out are helping to boost New Zealand's bottom line.

The latest data on New Zealand's gross domestic product has been released, for the December quarter, and shows a bigger than expected increase.

GDP lifted 0.9 per cent over the three months ended December, boosted by the service industries, including restaurants and hotels.

That was offset by falls in the agriculture and manufacturing sectors.

Household spending was up 1.1 per cent through the quarter, driven by 3.5 per cent more being spent at restaurants and almost 2 per cent more on clothes and shoes. The amount spent on petrol also increased.

Economist Gareth Kiernan of Infometrics said the data was in line with a recovery in consumer confidence late last year. 'It seems people are feeling a lot happier after a lull in the middle of the year.'

He said cheaper petrol prices were probably prompting people to use their cars more.

Tourists are also helping. Spending by international visitors was up 26 per cent year-on-year, to a record $12.8 billion for 2015.

Business investment decreased 2.6 per cent, after a strong increase in the September 2015 quarter.

Although construction-related investment increased, this was offset by lower investment in plant, machinery, and equipment; and transport equipment.

'While we've seen 0.9 per cent growth in both the December and September quarters, growth for the year ended December 2015 edged down to 2.5 per cent,' Statistics New Zealand's national accounts senior manager Gary Dunnet said. 'This reflects the slower first half of 2015.'

The size of the economy in current prices was $246 billion for the year ended December 2015.

Kiernan said he expected the pace of growth to slow over the rest of the year, although the outlook for New Zealand's economy was still solid.

Statistics New Zealand's spokesman Daniel Griffiths said New Zealand's growing population was helping. Employment rates were improving and wages were growing, he said.