All references to quarterly movements are to seasonally adjusted chain-volume series expressed in 1995/96 prices unless otherwise stated.
Economic activity declines for both year and quarter
Economic activity declined 1.0 percent in the March 2009 quarter, the fifth consecutive quarterly decrease in Gross Domestic Product (GDP). Economic activity for the year ended March 2009 declined 1.0 percent, compared with growth of 3.1 percent growth for the year ended March 2008. This is the largest annual contraction in economic activity since the year ended March 1992 when the economy contracted by 1.3 percent.
Activity in primary industries was flat in the latest quarter. Agriculture decreased 0.1 percent this quarter while fishing, forestry, and mining increased 0.2 percent.
Activity in goods producing industries decreased 4.9 percent in the March 2009 quarter, with the main driver being manufacturing activity. All manufacturing industries recorded decreases, except for non-metallic mineral manufacturing, which remained flat. Manufacturing activity has contracted for the last three quarters.
Service industries were down 0.1 percent in the latest quarter. Decreases in transport and communication (down 4.5 percent), and wholesale trade (down 3.8 percent) were the main contributors to this decrease. Partly offsetting the overall decrease in service industries was the finance, insurance and business services industry (up 2.3 percent), mainly driven by real estate and business services.
The expenditure-based measure of GDP, released concurrently with the production-based measure, recorded a 0.7 percent decrease in the March 2009 quarter.
Household consumption expenditure decreased 1.4 percent in the March 2009 quarter. Durable goods and services both fell, down 2.5 percent and 0.2 percent, respectively. Expenditure on non-durable items recorded a small rise (up 0.1 percent). In the year ended March 2009, household consumption expenditure decreased 0.7 percent.
Gross fixed capital formation, which measures investment in fixed assets, was down 6.1 percent in the March 2009 quarter. Business investment fell 7.3 percent this quarter, mainly due to a 37.3 percent fall in investment in transport equipment, and a 4.7 percent fall in plant machinery and equipment investment.
Total exports increased 0.6 percent in the March 2009 quarter, mainly driven by an increase in exports of dairy products (up 11.9 percent). Total import volumes were down 8.6 percent, with machinery and plant (down 13.7 percent), and passenger motor cars (down 47.4 percent) making the largest contributions.
Gross domestic product by industry
Primary industries
Primary industry activity was flat in the March 2009 quarter, following a 0.8 percent increase in the December 2008 quarter. Mining was up 2.3 percent in the latest quarter, mainly due to a new oil field (Maari) which began production in February 2009.
Agriculture remained relatively flat (down 0.1 percent). The other primary industries, forestry and logging, and fishing, both fell.
For the year ended March 2009, activity in primary industries increased 0.2 percent, compared with a 5.0 percent increase for the year ended March 2008.
Goods-producing industries
Activity in goods-producing industries decreased 4.9 percent in the March 2009 quarter, the fifth consecutive quarterly decrease. Manufacturing was the main contributor to the decrease.
Manufacturing activity declined 7.2 percent this quarter, the largest quarterly decrease since the series began in June 1986. All manufacturing industries decreased in the March 2009 quarter, except for non-metallic mineral manufacturing, which remained flat. Food, beverage and tobacco manufacturing (down 4.8 percent), machinery and equipment manufacturing (down 11.9 percent), and metal product manufacturing (down 16.0 percent) were the largest contributors to the decrease. The decline in manufacturing activity, combined with an increase in exports of dairy products, and other food, beverages, and tobacco, contributed to a run-down of manufacturing inventories in the latest quarter.
Manufacturing was down 5.4 percent for the year ended March 2009. All components of manufacturing were down for the year, with wood and paper product (down 11.1 percent) and metal product manufacturing (down 11.0 percent) leading the decline.
Electricity, gas, and water decreased 2.9 percent, while construction was the only goods producing industry to increase in the latest quarter. Construction activity increased 0.4 percent in the March 2009 quarter, following four consecutive quarters of decline. The increase in construction activity was mainly due to an increase in other construction, which includes non-building construction, such as roads, bridges, railway maintenance, and power plants. Non-residential building was down 1.4 percent this quarter, while residential building was down 0.8 percent.
For the year ended March 2009, activity in goods-producing industries decreased 5.6 percent. This is the largest annual decline in the goods-producing industries since the year ended December 1991.
Service industries
Activity in the service industries was down 0.1 percent in the March 2009 quarter, following a 0.8 percent increase in the December 2008 quarter.
The main contributors to the decrease in service industries in the latest quarter were transport and communication (down 4.5 percent) and wholesale trade (down 3.8 percent). The decrease in transport was due to decreases in both road freight and air transport. The decrease in communication services was mainly due to postal and courier services as the volume of posted items declined in the March 2009 quarter.
Offsetting these decreases in services were increases in finance, insurance and business services (up 2.3 percent), personal and community services (up 0.2 percent), and government administration and defence (up 0.3 percent). The increase in finance, insurance, and business services was mainly driven by real estate and business services.
For the year ended March 2009, service industries were up 0.8 percent, compared with growth of 3.8 percent for year ended March 2008.
Unallocated items
Unallocated items include taxes, and items that are not allocated to any specific industry. These items are: the financial service charge, the seasonal adjustment balancing item, and taxes which are levied on the purchaser not the producer (such as GST and import duties). Unallocated items were down 11.6 percent in the March 2009 quarter, mainly due to lower import duties (down 14.9 percent). Imports of goods were down 8.4 percent this quarter.
Expenditure on gross domestic product
Expenditure on GDP decreased 0.7 percent for the March 2009 quarter. For the year ended March 2009, expenditure on GDP decreased 1.6 percent. While the production- and expenditure-based measures are both official series, the production-based measure has historically shown less volatility and is the preferred series for quarter-on-quarter changes.
Households
Household final consumption expenditure fell 1.4 percent in the March 2009 quarter, the largest fall in household spending since the June 1991 quarter. For the year ended March 2009, household consumption expenditure fell 0.7 percent, the first annual decrease since the year ended September 1992. Household consumption expenditure measures the volume of spending by New Zealand-resident households on goods and services.
Household expenditure on durables decreased 2.5 percent for the March 2009 quarter, following a 1.7 percent decrease in the December 2008 quarter. Decreased household spending on retail furniture and major appliances, and new vehicles were the main contributors to the fall in durables in the latest quarter.
Household expenditure on services also decreased, down 0.2 percent in the March 2009 quarter. The decrease came mainly from reduced spending on overseas air travel and in restaurants.
Expenditure on non-durables increased slightly in the March 2009 quarter (up 0.1 percent). Household expenditure on food and beverages was the main contributor to the increase.
Residential building decreased 0.3 percent in the latest quarter, the seventh consecutive decline in residential building. For the year ended March 2009, residential building decreased 23.4 percent.
Business investment
Business investment in fixed assets decreased 7.3 percent in the March 2009 quarter, following a decrease of 1.7 percent in the December 2008 quarter. For the year ended March 2009, business investment in fixed assets decreased 3.3 percent, compared with an increase of 4.2 percent for the year ended March 2008.
Investment in plant and machinery fell 4.7 percent in the latest quarter, following a 4.2 percent fall in the December 2008 quarter. Imports of plant and machinery capital goods were down 13.7 percent in the March 2009 quarter, and domestic production of machinery and plant also decreased.
Investment in transport equipment also decreased in the March 2009 quarter (down 37.3 percent). Imports of transport equipment fell 54.7 percent. Investment in non-residential building decreased 4.9 percent in the March 2009 quarter.
Overall, total inventories have run down $215 million in the March 2009 quarter, with a $234 million run-down in manufacturing inventories being the largest contributor. While distribution inventories also declined in the quarter, agriculture and forestry inventories offset these, with a build up of $45 million and $128 million, respectively.
Government
General government final consumption expenditure increased 0.4 percent in the March 2009 quarter, and was up 3.4 percent for the year ended March 2009. Central government recorded a 0.6 percent increase in expenditure in the latest quarter, with increases in health, education, and public order and safety spending being the main contributors. Local government final consumption expenditure decreased 1.2 percent in the March 2009 quarter.
Exports and imports
Export volumes of goods and services increased 0.6 percent in the March 2009 quarter, following a 3.1 percent decrease in the previous quarter. Export volumes for the year ended March 2009 were down 3.4 percent.
The volume of goods exported increased 1.0 percent in the March 2009 quarter. An 11.9 percent increase in export volumes of dairy products made the largest contribution to the increase. Partly offsetting the increase was a decrease in exports of metal products, machinery, and equipment (down 10.6 percent) in the March 2009 quarter.
Exports of services were up 1.8 percent in the March 2009 quarter. Exports of travel services, which measures the volume of spending by overseas visitors to New Zealand, increased 3.8 percent. Miscellaneous service exports decreased in the March 2009 quarter (down 8.8 percent). This category covers services such as management fees and advertising.
Import volumes of goods and services were down 8.6 percent in the March 2009 quarter. On an annual basis, import volumes decreased 4.4 percent for the year ended March 2009, compared with the 9.6 percent increase in the year ended March 2008. In the March 2009 quarter, merchandise import volumes decreased 8.4 percent, while imports of services decreased 7.9 percent.
The largest decreases in merchandise import volumes in the latest quarter came from imports of capital goods. Within capital goods, imports of machinery and plant (down 13.7 percent), and transport equipment (down 54.7 percent) both decreased. Investment in plant machinery and equipment fell 4.7 percent, and transport equipment investment fell 37.3 percent in the March 2009 quarter.
Imports of intermediate goods decreased 6.0 percent in the March 2009 quarter, and imports of consumption goods decreased 6.3 percent. Imports of passenger motor cars also decreased this quarter (down 47.4 percent), following a 27.5 percent decrease in the previous quarter.
Real gross national disposable income
Real gross national disposable Income (RGNDI) decreased 0.8 percent for the year ended March 2009, while GDP decreased 1.0 percent over the same period. This is the first time annual RGNDI has decreased since the year ended September 1992.
GDP is a measure of economic activity. RGNDI is a measure of the volumes of goods and services that New Zealand residents have command over. It takes into account changes in the terms of trade effect (the price of imports relative to the price of exports), and real gains from net investment and transfer income with the rest of the world.
Implicit price deflators
The GDP implicit price deflator (IPD) for the year ended March 2009 increased 2.6 percent. The GDP IPD is a broad measure of the overall price change for final goods and services produced in New Zealand.
The IPD for gross national expenditure was up 3.6 percent for the year ended March 2009. This provides a broad measure of the overall price change for final goods and services purchased in New Zealand (such as consumer and investment goods).
Revisions
Production measure
- Minor revisions, involving updated source data, have been made to the following industries: agriculture, local government, transport and storage, retail trade, construction, finance and insurance, property services, mining, and GST.
- Forestry and logging have been revised as provisional data has been replaced with actual data.
- Revisions from the Wholesale Trade Survey, and Quarterly Economic Survey of Manufacturing have been incorporated.
- Central government has been revised, due to revisions in the Labour Cost Index.
- Import duties have been revised in the September and December 2008 quarters, due to revised overseas trade indexes data.
Expenditure measure
- Imports were revised for the September 2008 and December 2008 quarters as a result of changes to the broad economic category classification from HS 2007. These revisions also flowed through to gross fixed capital formation for plant machinery and equipment.
- Central government has been revised, due to revisions in the Labour Cost Index and updated source data.
- Inventories series have revised, due to updated source data.
For technical information contact:
Anqi Tan or Viki Ward
Wellington 04 931 4600
Email: info@stats.govt.nz
Next release ...
Gross Domestic Product: June 2009 quarter will be released on 23 September 2009.