A sting in the tail from last summer's drought could take New Zealand's economic growth into negative territory over the June quarter, but it will not alter what is expected to be a period of robust activity later in the year, economists said.

They said a string of second tier, or "partial" data pointed to a softer-than-expected quarter for gross domestic product (GDP) growth but that the economic outlook - buoyed by a mild winter and strong growth in agricultural production - was positive.

Statistics NZ's (SNZ) survey of manufacturing, released on Monday, showed meat and dairy products drove a fall in manufacturing sales for the June quarter, driven in part by the drought. After adjusting for seasonal effects the volume of total manufacturing sales fell 3.4 per cent.

Last week, Statistics NZ said wholesale trade sales fell during the quarter. Seasonally adjusted, total sales were down 1.5 per cent, after increasing in the two previous quarters.


The department said earlier that residential building activity fell 1.8 per cent in the June 2013 quarter - the first fall in a year - following a strong increase in the March quarter.

The Bank of New Zealand said the latest data was sufficiently weak for it to revise down its June quarter growth expectations to minus 0.2 per cent, quarter-on-quarter, from a small positive.

"Overall, however, we see the step down in Q2 activity as temporary, actually revising higher our expectations for Q3 GDP to 1.3 per cent," BNZ said in a commentary.

The BNZ's head of research Stephen Toplis said recent partial data showed that activity was weaker than expected.

"We think it just reflects how strongly the drought affected activity in the first part of this year and it has very few implications for where we are headed - because it reflects a historical event," he said.

The Reserve Bank, which will on Thursday release its quarterly monetary policy statement, has said it intends to keep its official cash rate at 2.5 per cent for the remainder of the year.

"Given the weakness of the data items, we also see no reason why the Reserve Bank would want to change its view," Toplis said.

ANZ Bank senior economist Mark Smith is not ruling out a negative outcome for GDP over the quarter. He expects a 0.2 per cent gain compared with his previous forecast of 0.3 to 0.4 per cent increase.

But Smith stressed that the data, due on September 19, would "look in the rear vision mirror" and would have little bearing on what lay ahead.

"`Our gauges are definitely pointing to a pickup in momentum in the second half of the year," he said. ANZ expects to see further improvements in construction activity, strong agricultural production in the third and fourth quarters and a pickup in core manufacturing activity.