Tourism sector a top performer
NEW Zealand’s annual rate of gross domestic product output was underpinned by retailing, accommodation and commercial construction sectors, but otherwise reflected a cooling from 2.6% to 2.3%.
While sectors attached to tourism showed strong increases, analysts saw weakness in the primary sector, while declines in livestock production and mining activity also weighed down activity.
Analysts are out of sync over the expected extent of growth for the remainder of this year — the ASB are wary of sour business sentiment, but Westpac foresees plenty of support from government spending.
StatsNZ national accounts senior manager Gary Dunnet said that overall the quarterly growth in retail and accommodation was the largest seen since the 2011 Rugby World Cup.
‘‘Retail and accommodation led the service industries with a 2.5% rise, driven mainly by food and beverage services,’’ he said.
That was reflected in higher household spending on restaurants and hotels, he said.
Annual GDP growth for the year ended December 2018 was 2.3%, while GDP for the quarter to December grew 0.6%, compared with 0.3% rise for the previous quarter.
Both quarterly and annual GDP growth rates were below Reserve Bank’s expectations of 0.6% and 2.7% respectively.
Mr Dunnet said GDP growth was mixed at the industry level, with 10 of the 16 industries recording increases.
Earlier in the week separate GDP data was released, which showed Otago’s nominal GDP, which based on current services prices, unadjusted for inflation, was the top of 15 regions for the year to March of 8.6%.
However, when its GDP per capita was measured, it ranked fifth in the country and was the closest to the national average of $41,209.
ASB senior economist Jane Turner said while the services sector growth proved more ‘‘resilient’’ than expected, she remained ‘‘wary’’ that GDP growth might not pick up during 2019, given the subdued business sentiment.
‘‘Much of the positive surprise was due to exceptionally strong growth in areas where we don’t have reliable indicators,’’ she said, citing a ‘‘whopping’’ 3.2% lift in transport, postal and warehousing and a 1.8% gain in information media and telco services.
She highlighted the retail trade and accommodation had lifted a strong 2.5% quarter on quarter, its strongest lift since the Rugby World Cup.
‘‘This suggests the tourism sector was performing well at the end of 2018, despite tight accommodation capacity acting as a headwind to this sector,’’ she said.
Westpac senior economist Michael Gordon said the economy had ‘‘lost some momentum’’ during the second half of 2018, but not as much as he had expected.
That gave more comfort the growth momentum would pick up again this year, supported by government spending, construction, and rising household incomes, Mr Gordon said.
Mr Gordon said expected strong gains in retail spending (up 2.5%) and construction (up 1.8%) were among the high lights for the quarter, while there were ‘‘solid contributions’’ from a 1.8% gain in government services and 0.9% in healthcare.
‘‘The temporary [Pohokura gas supply] disruptions in the energy sector were apparent, with declines in mining, manufacturing and electricity generation.
‘‘Growth in personal and business services was subdued,’’ he said.
Like ASB, Mr Gordon said the main surprises were the strong rebounds of transport, gaining 3.2%, and telecommunications, up 1.6%, after surprisingly weak data from the previous quarter.
That gave some indication the weak September quarter GDP result had overstated the extent of the slowdown, to some degree.
‘‘The other surprise for us was the ongoing strength in rental, hiring and real estate services, which is out of step with the slowdown in house sales in that time,’’ Mr Gordon said.
❛ This suggests the tourism sector was performing well at the end of 2018, despite tight accommodation capacity acting as a headwind to this sector
ASB senior economist Jane Turner