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Economy builds on strong foundations

Strong housing activity and Kiwi consumer spending helped drive economic growth of 0.9 percent in the June quarter, Statistics NZ said earlier today.

“We saw greater housing-related activity this quarter. Household spending was up 1.9 percent, its biggest rise since 2009. Record numbers of houses were sold, construction figures were up, and activity increased for manufacturers of products used mainly in the construction sector,” national accounts senior manager Gary Dunnet said.

“The equivalent of 400 Olympic pools worth of concrete was poured in the June quarter,” Mr Dunnet said.

A record number of house sales pushed real estate services to its highest quarterly rise in 18 months. There is also ongoing strong demand for new builds, particularly in the Auckland region as reported in Value of Building Work Put in Place: June 2016 quarter.

Construction sector activity rose 5.0 percent, on par with last quarter’s rise of 5.1 percent. This was driven primarily by residential building increasing 6.0 percent.

“All up, construction-related investment makes up almost $34 billion, or 13 percent, of GDP over the year,” Mr Dunnet said.

Manufacturing grew 0.8 percent in the June 2016 quarter, a rise connected to construction. The largest contributor to the growth was non-metallic mineral product manufacturing, which increased 11 percent. This industry includes glass, cement, and concrete manufacturing – products used mainly in the construction sector.

Households had their wallets out, with household spending rising $4.8 billion dollars over the year, to a total of $141 billion. Spending recorded the largest quarterly increase in seven years, up 1.9 percent over the June 2016 quarter, once we remove the effect of price change. Kiwis were spending more on going away on trips, eating out, and furnishing their houses.

Households were also buying longer-lasting items like clothing; furniture and furnishings; and audio-visual equipment.

Graph, Household consumption expenditure, quarterly change, June 2008 to June 2016.

For more analysis and data, see Gross Domestic Product: June 2016 quarter.

Ends

For media enquiries contact: Daniel Griffiths, Wellington 04 931 4600, info@stats.govt.nz
Authorised by Liz MacPherson, Government Statistician, 15 September 2016

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