Business is feeling more confident as the economy grows 1.1% in the September quarter
Thursday, 18 December 2025
A higher than expected increase in the size of the economy will lead to more jobs and the prospect of higher pay for workers, Finance Minister Nicola Willis says.
The economy grew by 1.1% in the September quarter, exceeding most expectations, according to Stats NZ figures.
The bounce continued a volatile trend for economic activity and follows a 1% drop in the previous quarter and a rise in the March quarter.
Willis said the GDP figures reflected broad-based growth in the economy over the last quarter from manufacturing through to construction and business services, and business had adjusted to the Trump tariffs in the second quarter.
“It demonstrates that having now adjusted to global conditions, businesses, investors, our economy, is feeling confident,” she said.
“Exports are up, despite all the challenges the world has thrown at us, manufacturing is up. Construction is up. We are growing.”
That would be reflected in household finances and job security, she said.
Stats NZ figures showed Gross Domestic Product (GDP), a measure of economic activity, had risen in three of the past four quarters, but was down over the year ended September compared to the same period a year earlier.
Bank economists had expected economic activity to rise by between 0.6% and 1.1% in the three months to the end of September.
ASB economists said the GDP increase alone was not enough for the Reserve Bank to hike interest rates to the extent that markets had been expecting.
The bank was looking to the Consumer Price Index for the fourth quarter due out in January for signs that the Reserve Bank could bring forward interest rate increases.
ANZ economist Matthew Galt agreed the Reserve Bank would see the OCR staying at its current level for some time – “a message reinforced by the governor’s comments earlier this week, and it will take more than today’s GDP data to materially shift that view”.
The central bank would assess GDP “in the context of wider measures of capacity pressures and activity, which have been improving, but not uniformly”.
Stats NZ economic growth spokesperson Jason Attewell said the rise in economic activity was broad based with increases in 14 of the 16 industries covered by the survey. That compared with the June quarter, when GDP fell in 10 industries.
Business services were the largest contributor to the overall quarterly increase, up 1.6%, driven by a 2.1% increase in professional, scientific and technical services, such as computer system design and related services.
Manufacturing was up 2.2% having fallen 3.9% in the June quarter, Attewell said.
But the information media and telecommunications segment had the largest drop in the September quarter, down 2.1%.
The expenditure measure of GDP rose 1.3% during the quarter, following a 0.8% fall in the June quarter.
Exports were up 3.3% mainly driven by travel services, dairy and insurance services.
'Businesses invested more in physical fixed assets in the September quarter. There were increases in transport equipment and plant, machinery and equipment, supported by imports of the related capital goods and motor vehicles,' Attewell said.
Household consumption expenditure rose 0.1% in the quarter. Spending on durables rose 2% while expenditure on services fell 0.1% and non-durables fell 0.2%.
Higher consumer spending on durables was driven by rises in audio-visual equipment, such as TVs, computers and mobile phones, and motor vehicles.
'The retail trade survey also showed increased spending on durables in the September quarter, with motor vehicle parts retailing up 7.2%, and electronic goods retailing up 9.8%,' Attewell said.