Liam Dann: Latest business activity data offers clues to next week’s GDP number

Construction activity was down quarter on quarter. Photo / Michael Craig

The latest business financial data from Stats NZ shows a big lift in activity, when compared to a year earlier, but quarter-on-quarter, the results are more mixed.

Business financial data provides sales, purchases, salaries and wages, and operating profit estimates for most market industries in New Zealand, and information on stocks for selected industries. This collection uses a combination of survey, tax, and other administrative data.

It is viewed as an indicator for the broader Gross Domestic Product (GDP) data due next Thursday.

It showed that in the March 2023 quarter, compared with the March 2022 quarter sales were $181 billion, up $10b or 5.6 per cent.

Purchases were $129b, up $6.8b or 5.6 per cent and salaries and wages were $29.3b, up $2.3b (8.6 per cent).

Operating profit was $22.7b, up $516 million (2.3 per cent).

But on a quarter-by-quarter basis, the results don’t look so good for economic activity.

When adjusting for seasonal effects, in the March 2023 quarter compared with the December 2022 quarter, sales in just six of the 14 New Zealand Standard Industrial Output Classification (NZSIOC) level 1 industries increased.

Stats NZ said the industries that had the largest movements in sales were manufacturing, down $936m; construction, down $902m; and electricity, gas, water and waste services, up $402m.

In the March 2023 quarter, when adjusted for seasonal effects against the previous quarter, the volume of total manufacturing sales fell 2.1 per cent, following a 4.6 per cent fall in the December 2022 quarter.

The value of total manufacturing sales fell $936m (2.8 per cent), following a $321m (1.0 per cent) fall in the December 2022 quarter.

In the construction category, total sales were $24b, down $902m (3.7 per cent) from the December 2022 quarter.

Actual purchases rose $388m (2.5 per cent) and salaries and wages rose $408m (11 per cent) in the March 2023 quarter, compared with the March 2022 quarter.

For retail trade and accommodation, total sales were $30b, down $77m (0.3 per cent) from the December 2022 quarter.

Actual purchases rose $798m (3.5 per cent), and salaries and wages rose $339m (8.9 per cent) in the March 2023 quarter, compared with the March 2022 quarter.

By industry, the sales movements were: retail trade - down $16m (0.1 per cent) and accommodation and food services - up $39m (0.7 per cent).

On the same seasonally-adjusted basis, the total value of wholesale trade sales fell 0.3 per cent, or $99m, in the March 2023 quarter, following a 0.1 per cent ($35m) rise in the December 2022 quarter.