Figures point to growth ‘wobble’

The last major economic figures of the year are likely to show an economy cooling, amid warnings that a fall in confidence could soon hit activity.

On Thursday Statistics NZ releases economic growth figures for the three months to September 30, a period which included the election but preceded the formation of the new Government.

The figures will effectively paint a picture of the economy handed to the new Government by National; one arguably driven by population growth which is now hitting constraints in previous boom sectors, construction and tourism.

ASB has forecast that economic growth fell to just 0.4 per cent in the quarter, and 2.2 per cent for the 12 months to September 30, which it pointedly noted was just fractionally above the 2.1 per cent increase in the population over the same period.

‘‘Growth’s performance over the past year has been underwhelming and we have scaled back our optimism for coming years as a result.’’

Economists at ANZ said that although there was not enough evidence to claim that the current strong economic cycle was over, there were a number of factors which could lead to a ‘‘growth wobble’’ in the coming quarters.

Business confidence began falling in the lead-up to the election, and plunged in the month following the formation of the new Government to levels not seen since the global financial crisis. Although this has had little obvious impact on activity so far, there are concerns it will hit investment and hiring.

ANZ chief economist Sharon Zollner said with the economy already facing headwinds, ‘‘the risk is that heightened policy uncertainty sees firms retrench and hold off on spending, investment and hiring decisions’’.

Meanwhile, a weaker housing market could lead to a wider loss of confidence among consumers.

‘‘While we actually view a cooler market as a positive thing from a medium-term growth sustainability perspective, history has taught us that a softer housing market can have broader spillovers to confidence and spending, and we are hearing more anecdotes to that effect.’’

Not all economists see activity falling. BNZ has forecast that growth in the quarter was likely to have been about 0.7 per cent.

‘‘We still think activity’s growing at a reasonable pace,’’ BNZ economist Doug Steel said, pointing to measurements of manufacturing and services which were still showing modest expansion.

Although confidence had been hit, these measurements reflected activity as opposed to sentiment.

Since the election, house sales had picked up, as had electronic card spending in the run-up to Christmas.

‘‘There’s still enough [happening] to suggest growth is still reasonable,’’ Steel said.

A quirk of timing could, meanwhile, improve a measure which may have undermined National’s claims about the strength of the economy, just weeks after it was thrown out of office.

Thursday’s economic growth figures will be the first to incorporate recent revisions by Statistics NZ which showed nominal GDP had expanded faster since 2013 than previously thought.

New Zealand’s productivity has been low in recent years. In August, JBWere analyst Bernard Doyle declared a ‘‘productivity recession’’ since 2012, suggesting Kiwi workers were producing less per hour than in the past.

However, the revision could change the picture at least slightly.

The exact nature of the increase in GDP calculated by Statistics NZ is unknown, meaning the impact on labour productivity is unknown, but it is predicted to have had a measurably positive impact.

‘‘It will certainly change the picture, I guess, to a less slow productivity picture over the last few years,’’ BNZ’s Steel said.