NZ economy grew at slowest pace in five years

Economic activity: Fergusson container terminal at the Ports of Auckland. New Zealand Herald Photograph

The New Zealand economy slowed sharply in the three months to September 30, new GDP figures show.

Gross domestic product (GDP) rose 0.3 per cent in the September 2018 quarter, down from 1.0 per cent in the previous quarter, Stats NZ said today.

The growth was the lowest quarterly growth rate since December 2013, StatsNZ said.

Most economists had been expecting it to come it at 0.5 per cent. The Reserve Bank had forecast 0.7 per cent.

That took the annual growth rate to 2.6 per cent.

The kiwi dollar fell on the news - dipping as much as a third of cent against the US dollar - to US67.6c.

However it was already down more than 0.5USc after the US Federal Reserve rate hike this morning.

Growth was mixed, with 11 of the 16 industries recording higher production in the September 2018 quarter.

"Primary industries grew 2.2 per cent, while growth in service industries slowed to 0.5 per cent. The goods-producing industries fell 1.0 per cent, dragging down overall growth this quarter," national accounts senior manager Susan Hollows said.

"Construction activity fell as repair work winds down on roads damaged in the Kaikōura earthquake. However, residential and non-residential construction continued to grow steadily.

"The largest contribution to the downturn in goods-producing industries was manufacturing, with food manufacturing down significantly," Hollows said.

Growth in the service industries was widespread but moderate, with no industries having strong movements.

Westpac senior economist Michael Gordon noted that the "surprise weakness" was softened by some upward revisions to the GDP history.

These showed the growth slowdown over the last couple of years has been more modest than thought.

Growth over the 2017 calendar year has been revised to 3.1 per cent, compared to per cent previously.