Growth in household spending eases this quarter

Economic activity increased 0.7 percent in the June 2007 quarter, Statistics New Zealand said today.

Service industries continue to underpin growth, with finance, insurance and business services industries accounting for over half of this quarter's increase.

In the year ended June 2007, the economy grew 2.2percent.Domestic spending increased 1.5 percent in the June 2007 quarter, continuing on from the March 2007quarter's strong growth.

Although last quarter's growth was primarily the result of a large rise in householdconsumption expenditure, this quarter's growth was driven by increased investment in inventories, withcomparatively modest growth in household consumption expenditure.

A negative trade balance continuedto partly offset the strong domestic result.Manufacturing activity increased 0.5 percent this quarter.

Increases in machinery and equipmentmanufacturing, and wood and paper product manufacturing more than offset a decline in petroleum refiningwhich resulted from a 24-day maintenance shutdown at the Marsden Point refinery during the June 2007quarter.

Due to greater volumes of petroleum extraction, activity in mining also increased strongly this quarter.

Further growth in this industry is expected, as the Tui oilfield comes online in the September 2007 quarter.

The expenditure-based measure of GDP, released concurrently with the production-based measure,recorded a 0.8 percent increase in the June 2007 quarter