Wed Jun 17 17:45:00 CDT 2015

Actual Previous
Q/Q percent change 0.1% 0.8%
Y/Y percent change 3.2% 3.5%

After a series of strong increases, GDP increased 0.2 percent in the March 2015 quarter. The lower growth reflected a 2.9 percent decline in primary industries (agriculture, forestry, and mining) the largest fall since September 2010. Despite lower quarterly growth, annual growth was still strong, at 3.2 percent.

Agriculture decreased 2.3 percent in the March 2015 quarter. Lower milk production was behind the decrease, in a quarter that had drought conditions and lower dairy prices. Forestry production and exports of forestry products were also down. A 2.4 percent increase in retail trade & accommodation helped to offset the decrease in primary industries.

Retail trade & accommodation has had continued strong increases and now has its largest annual growth in almost a decade, at 6.1 percent. The 2015 Cricket World Cup and more visitors during Chinese New Year than in the past helped elevate this category. International tourist spending in New Zealand increased 2.3 percent this quarter, and there was an increase in arts and recreation (including sport, recreation, and gambling services), and international air travel.

It was a mixed picture for the rest of the economy this quarter. On the expenditure measure of GDP, household spending increased 0.7 percent, while investment fell 1.9 percent. An increase in construction investment was offset by large decreases in both machinery and equipment investment.

GDP data are a comprehensive measure of a New Zealand's overall production and consumption of goods and services. GDP serves as one of the primary measures of overall economic well-being. GDP calculates the total market value of goods and services produced in New Zealand within a given period after deducting the cost of goods and services used up in the process of production. Therefore, GDP excludes intermediate goods and services and considers final aggregates only. The New Zealand System of National Accounts (NZSNA) is a comprehensive accounting framework based on an international standard (System of National Accounts, 1993).

Gross domestic product (GDP) can be measured using three approaches, namely the production, income and expenditure approaches. The production measure of GDP is derived from firm level data and estimates the value added by all producing industries in the New Zealand economy. The income measure of GDP is derived from earnings data and estimates how the income earned from these producing industries is then distributed throughout the economy as returns to labor, capital and government. The expenditure measure of GDP is derived from data estimating spending on goods and services by final end users and includes consumption, investment and exports minus the value of imports.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.