Annual gross domestic product declines

Economic activity, as measured by Gross Domestic Product (GDP), was down 1.0 percent in the March 2009 quarter, Statistics New Zealand said today. On an annual basis, GDP decreased 1.0 percent for the year ended March 2009, the first annual decline in economic activity since the year ended June 1992. The largest contributors to the annual decline in GDP were construction (down 8.9 percent) and manufacturing (down 5.4 percent). The annual GDP movement compares total activity in the year ended March 2009 with total activity in the year ended March 2008.

The 1.0 percent decrease in economic activity in the March 2009 quarter was the fifth consecutive fall in GDP. The main contributor to the decline this quarter was manufacturing activity, which fell 7.2 percent. Nearly all manufacturing sub-industries decreased this quarter, with the food, beverage, and tobacco; machinery and equipment; and metal product sub-industries recording the largest falls. Construction activity was up 0.4 percent this quarter, following four quarters of contraction. Non-residential building activity fell, but this was offset by a rise in other construction activity. Other construction includes work on projects that are not buildings, such as roads, bridges, railway track maintenance, and power plants. Partly offsetting the decreases in GDP in the latest quarter was an increase in real estate and business services, which rose 3.2 percent.

The expenditure measure of GDP, released concurrently with the production measure, decreased 0.7 percent in the March 2009 quarter. Household consumption expenditure, which measures the volume of spending by New Zealand households, was down 1.4 percent, the largest quarterly decline in household spending since the June 1991 quarter. The main driver of this was durable goods, which includes spending on motor vehicles, furniture, and major appliances.

Gross fixed capital formation, which measures investment in fixed assets, was down 6.1 percent in the March 2009 quarter. Decreases in investment in non-residential buildings, transport equipment, and plant machinery and equipment all contributed to the decline. The decreases in transport equipment, and plant machinery and equipment are consistent with a decrease in the imports of these types of goods this quarter.