17 Feb 2011

National Bank survey points to return to recession

7:31 am on 17 February 2011

A survey has signalled the domestic economy fell back into recession in the second half of last year.

The National Bank's regional trends survey, seen as a rough pointer to the official measure on the economy's health - GDP -shows activity shrank 0.2% in the three months to December.

A weak housing market and higher unemployment offset rising commodity prices and a rebound in business confidence.

The bank's September survey also showed a 0.2% contraction in activity.

If confirmed by Statistics New Zealand in late March, the figures would technically put the country in recession.

National Bank economist Steve Edwards says the survey indicates a mild recession.

A rebound in activity in Christchurch following the devastation caused by September's earthquake led growth among the regions in the December quarter, although most rural areas declined.

On an annual basis, the economy expanded to a three-year high of 2.2%.