New Zealand Q3 GDP -1.0% q/q (vs. -0.4% expected)

New Zealand Q3 economic growth data is just awful – a much larger contraction than was expected.

New Zealand Q3 2024 GDP Performance:

• GDP Decline: The economy contracted by 1.0% in Q3 2024, following a revised 1.1% decrease in Q2 2024.
• Revision of Q2 Data: The Q2 contraction was revised downward due to updated annual data, which also showed stronger growth over the past year despite recent declines.
• Per Capita GDP: Fell by 1.2% in Q3 2024, marking the eighth consecutive quarterly decline.

Sectoral Highlights:

• Declines: Activity fell in 11 of the 16 industries:
  • Largest declines: Manufacturing, business services, and construction.
  • Goods-producing and service industries: Decreased.
• Increases:
  • Primary industries, led by agriculture (particularly dairy farming).
  • Rental, hiring, and real estate services also showed gains.

Expenditure Measure of GDP:

• Fell 0.8% in Q3 2024, matching the revised decline in Q2.
• Household Consumption: Decreased by 0.3%, driven by reduced spending on essentials (e.g., groceries and electricity).
  • Spending increases: Durable goods like motor vehicles, audio-visual equipment, and phones.

Insights:

• The manufacturing sector experienced the sharpest decline, with nearly all sub-industries reporting reduced output.
• Agriculture growth, fueled by dairy farming and exports (milk powder, butter, cheese), partially offset broader economic declines.
• Changes reflect an evolving economic structure, updated annually in line with international best practices.

This data underscores significant economic challenges in New Zealand, with declines across most sectors and reduced household consumption.

This data keeps the Reserve Bank of New Zealand on track for further interest rate cuts in 2024. The Bank next meets on February 19. That is LONG time away.

This article was written by Eamonn Sheridan at www.forexlive.com.