Economy grew 0.8% in March quarter
Thursday, 19 June 2025
Economic growth was slightly higher than expected in the March quarter gaining 0.8%, up from a 0.5% increase in the three months to December, according the latest Stats NZ figures.
Activity increased across all three main high level industry groups, including primary industries, goods-producing industries and service industries.
Economic growth spokesperson Katrina Dewbery said nine of the 16 industries increased, with business service and manufacturing making the biggest gains.
The rise in manufacturing was led by an increase in the production of machinery and equipment, reflecting increases in investment and exports.
The largest decreases were in the arts and creative services, information, media and telecommunications.
GDP per capita rose 0.5% during the March quarter.
Household consumption expenditure rose 1.4%, with services, durables, and non-durables all higher.
Higher spending on services was driven by increases in cultural services, higher digital services imports and accommodation services.
ANZ economists said the small lift reinforced the trend of an economic recovery over the past two quarters
“The underlying details of the release showed a cyclical recovery, with greater-than-expected strength in manufacturing, construction and professional services partially offset by weakness in other market-led services industries.”
The economy appeared to have started the year with more momentum than expected and a marginally less-negative output gap than the Reserve Bank had been assuming.
That raised the odds of the Reserve Bank pausing further easing of the official cash rate (OCR) in July, the economists said and was in line with the market view. The OCR is currently at 3.25%.
But the economy has considerable spare capacity, keeping core inflation restrained. “It will take a period of elevated growth to get things back to par, whereas recent weakness in some activities suggested growth could slow in the June quarter, they said.
If the Reserve Bank paused in July, ANZ expected 25 basis point cut of the OCR in August and remain on track for and end point of 2.5% as the economic recovery remained slower than expected.