17 Mar 2016

Economy up by 2.5 percent in 2015

2:02 pm on 17 March 2016

The economy is continuing to grow, with stronger activity in the services sector driving a 0.9 percent rise in the gross domestic product (GDP).

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Official figures show GDP, which is a broad measure of the health of the economy, grew almost 1 percent in the last three months of 2015.

That was more than economists had expected, and matched the 0.9 percent growth experienced in the September quarter.

First NZ Capital director of economics and strategy Chris Green said the growth had a familiar feel to the previous September quarter.

He said the theme coming through was strong consumption spending.

"And obviously an element of that I think you can put down to tourism spending. On the weaker side of the ledger, (there are) signs of softening in the agricultural sector."

Statistics NZ national accounts senior manager Gary Dunnet said services grew 0.8 percent overall.

"Business services in particular, posted a strong increase, as well as retail trade and accomodation."

That rise offset falls in the agricultural and manufacturing sectors.

Despite a pick up in activity in the second half of 2015, Dr Dunnet said annual growth edged down to 2.5 percent.

"This reflects the slower first half of 2015."

When comparing activity in the December quarter with the same period a year ago, the pace of growth was 2.3 percent.

The size of the economy stood at $246 billion.

Services growth

Business services - including advertising, marketing and management services - were the main driver of the growth in service industries, rising 1.5 percent.

Retail trade and accommodation also contributed to growth, reflecting higher household spending.

Construction rose 2.5 percent, with growth in residential, commercial and industrial building.

Agriculture fell 1.7 percent, due to lower sheep and beef production.

Household spending rises

The growth in the services sector reflects the growing population, which in turn reflects surging immigration.

Household consumption rose 1.1 percent, with higher spending on eating out, accommodation and international air travel.

People also spent more on clothing and audio-visual equipment.

Business investment fell 2.6 percent after a strong increase in the previous quarter.

A rise in construction-related investment was offset by lower spending in plant, machinery and equipment.

Exports rose 0.3 percent, while imports rose 0.7 percent.

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