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REPEAT: ANALYSIS: New Zealand Q3 GDP Supported by Construction

Repeats Story Initially Transmitted at 22:48 GMT Dec 20/17:48 EST Dec 20
--Household Consumption Growth Slows in Q3
By Sophia Rodrigues
     SYDNEY (MNI) - New Zealand's real GDP grew in line with expectations in the
third quarter as construction rebounded after two quarters of decline, but the
outcome was below the Reserve Bank of New Zealand's forecast. 
     GDP rose 0.6% q/q, with the y/y pace accelerating to +2.7%, as an upward
revision to Q2 GDP created a higher base for the q/q gain, data published by
Statistics New Zealand on Thursday show. The q/q outcome was in line with MNI
median forecast but the y/y growth rate was above the MNI survey median for
+2.4%. The RBNZ had forecast a 0.7% q/q gain.
     Growth was mainly supported by construction activity, which rose 3.6% q/q
and made a solid 0.2-percentage-point contribution to GDP. This was the largest
quarterly growth since the March 2016 quarter. Expenditures on road and rail
projects drove growth in infrastructure, which experienced the strongest
increase since 2007. Residential construction also reported a strong increase.
     The rise in construction activity removes a significant downside risk to
the RBNZ's monetary policy but much still depends on how household consumption
behaves in the period ahead. The RBNZ's expectation is that growth in both
consumption and construction will remove excess capacity in the economy and lead
to a pickup in non-tradable inflation.
     The data show household consumption growth slowed to a 0.9% q/q gain in Q3
from a 1.1% rise in Q2. Significantly, Q3 consumption growth was driven by
imports of low-value goods, which rose 5.5% after a 0.9% fall the quarter
before. Durable goods purchases rose 2.3% while non-durable spending was flat.
     New Zealanders' spending on foreign goods and services increased 4.1%, due
in large part to the strongest quarterly growth in imports of services since
2010.
     Among other industries, agriculture declined slightly during the quarter,
with decreased milk production partly offset by increased activity in cattle and
sheep farming. Dairy product exports fell 5.2% but other manufacturing
industries like transport equipment, machinery and equipment recorded increases
during the quarter.
     Activity in accommodation, restaurants, and bars fell in Q3 while retail
trade increased, leading to an overall fall in the retail trade and
accommodation industry. The decline followed strong growth in the June 2017
quarter, which was boosted by the Masters Games and the Lions Tour. 
     On a per capita basis, GDP rose 0.2% q/q, slowing from 0.5% growth in Q2. 
     New Zealand third quarter gross domestic product data published by
Statistics New Zealand on Thursday:
                                  Q3 Q/Q (% Change)  Q3 Y/Y (% Change)
----------------------------------------------------------------------
GDP                                            +0.6               +2.7
MNI median                                     +0.6               +2.4
RBNZ Forecast                                  +0.7
Main movements
Agriculture, forestry, fishing                 -0.1               +3.4
Mining                                         +3.2               +1.4
Manufacturing                                  +1.8               +2.6
Construction                                   +3.6               +1.9
Wholesale trade                                +0.6               +2.9
Retail trade/accommodation                     -0.4               +5.5
Professional, technical services               -0.3               +0.6
Financial, insurance services                  +0.7               +2.1
--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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