(Bloomberg) — New Zealand’s economy grew more than twice as much as economists expected in the third quarter, underscoring the difficulty the central bank faces in trying to damp demand to curb inflation.
Gross domestic product jumped 2.0% from the second quarter, when it gained an upwardly revised 1.9%, Statistics New Zealand said Thursday in Wellington. Economists forecast a 0.9% increase. From a year ago, the economy expanded 6.4%, exceeding the median estimate of 5.5%.
The data are “stupendously strong,” said Nat Keall, an economist at ASB Bank in Auckland. “The starting point for economic activity is substantially hotter than the RBNZ will have anticipated as it embarks on the remainder of the tightening cycle.”
The Reserve Bank is aiming to engineer a recession in 2023 to suppress demand and rein in inflation. Last month it stepped up its already aggressive interest-rate increases with a record 75 basis-point hike and said it would raise the Official Cash Rate, currently at 4.25%, to 5.5% next year.
The New Zealand dollar was little changed after today’s GDP release. It bought 64.58 US cents at 10:51 a.m. in Wellington. Ten-year government bond yields rose.
The RBNZ had forecast 0.8% growth for the third quarter.
The statistics agency said growth was primarily driven by services industries such as transport, which was boosted by the full reopening of the border during the quarter.
Bounce Back
Covid-19 swept the entire country for the first time at the start of 2022, triggering a contraction in the first quarter, but the economy bounced back strongly after that.
Annual inflation accelerated to 7.3% in the second quarter and eased less than expected to 7.2% in the third. Near record-low unemployment of 3.3% is fueling demand and driving up wages, adding to inflationary pressures.
Still, house prices are falling and the full impact of surging mortgage rates has yet to be felt.
Some 50% of mortgage books are yet to roll over, and some borrowers will reset from 2.5% to 6.5%, RBNZ Deputy Governor Christian Hawkesby said yesterday. Despite that, the central bank has “more work to do” to rein in inflation, he said.
The Treasury Department yesterday joined the RBNZ in predicting a 2023 recession. Both see it starting in the second quarter, with Treasury projecting three quarters of contraction and the RBNZ four.
Other details
The third-quarter expansion was led services industries, which grew 2%, the statistics agency said.
Transport, postal and warehousing was biggest contributor, rising 9.7% from the second quarter
Manufacturing output rose 0.1%
Construction rose 5.1%
Primary industries fell 0.2%
Household spending fell 0.1%
Retail trade and accommodation fell 0.7%
Exports rose 7.8%, led by dairy, travel services and meat
GDP per capita gained 1.9%
(Updates with economist’s comment in third paragraph)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
