23 Sep 2010

Economy continues to slow

8:59 pm on 23 September 2010

The pace of economic activity in New Zealand has slowed for the second consecutive quarter due to a decline in manufacturing.

Official figures show Gross Domestic Product, the broadest measure of the health of the economy, grew 0.2% in the three months to June.

Economists had expected the economy to expand by 0.8%.

On an annual basis, the economy grew 0.7%. Household consumption, which makes up about 60% of economic activity, remained flat.

The figures do not include the impact of the Canterbury earthquake on 4 September.

Finance Minister Bill English says the GDP figures show the patchy nature of the economic recovery.

Mr English says quarterly figures will fluctuate, but believes the economy is headed in the right direction as exports are strong and people are saving more.

The drop in manufacturing has surprised the Government, he says, but the overall export performance is good and that is important to rebalance the economy.

Prime Minister John Key says tax cuts on 1 October cannot come quickly enough.