But the strength that the NZ economy had shown thus far suggested activity was proving exceedingly resilient, he said.
“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 calculus in February is likely to be between 75 and 100bps rather than 50 vs 75.”
Services industries were up 2.0 per cent and led the charge. The transport, postal, and warehousing industry soared, up 9.7 per cent.
The economy grew 6.4 per cent in the year to September 30. At the same time last year, the Delta lockdown was stifling the economy, especially in Auckland.
Finance Minister Grant Robertson said the strong growth put New Zealand’s economy in a “good starting point” with global conditions expected to deteriorate next year.
He noted that the Government was no longer contributing to the growth with spending down 1.8 per cent in the September quarter and flat in the previous June quarter.
“This follows the Treasury saying yesterday that the Government’s fiscal policies were reducing inflation pressures in the economy,” Robertson said.
Despite the large than expected numbers, overall the post-pandemic story was pretty clear, said ANZ senior economist Miles Workman.
“Exports have taken a big hit thanks to the closed border and missing international tourists and students, but significant macroeconomic stimulus (fiscal and monetary) has seen domestic demand fill that hole.”
“Domestic and goods imports shares have been trending higher, while exports (particularly services) struggle. But this broad composition story is changing, with domestic demand slowing and net exports beginning their recovery,” he said.
“All in all, the data are still very noisy, but under the hood, there is a trend emerging: domestic demand is slowing (starting with household consumption), while services exports normalise due to the reopened border.”
With inflation and labour scarcity where they currently were, the result wasn’t exactly a game-changer for the monetary policy outlook,” he said.
“Nor does it change what lies ahead.”
The markets’ reaction to the data was muted, despite the quarterly number being about double that of market expectations.
The kiwi dollar was mostly unchanged at US64.6c and the two-year swap rate firmed by six basis points to 5.25 per cent.
ANZ senior strategist David Croy said the market’s lack of response could be put down to the “noise” in the data.
”Really the issue that the market is trying to grapple with is that was a very strong data - outside the normal ‘confidence’ bands in terms of what constitutes a significant upside surprise,” he said.
”It was more than double the consensus forecast and clearly stronger than what we were expecting (1.1 per cent).
”It was very strong at the headline level. I guess the only thing that is tricky is the detail.”
The details show very weak private consumption for the second quarter in a row, so that was a sign that monetary policy is starting to bite, Croy said.
”At the same time, services exports were very, very strong, with the borders reopening and tourism returning.
“Obviously, had the components not been so noisy, and had there not been the noise of Covid, this would stand out as absolutely being one for the ages.
”But this time around there are enough reasons for the markets to be slightly doubtful.”
Goods-producing industries rose 2.4 per cent, with construction up 5.1 per cent.
“With borders opening to all visitors in the September 2022 quarter, we have seen more spending on both international and domestic air travel,” national accounts industry and production senior manager Ruvani Ratnayake said.
“The rise in construction was mirrored by increases in residential building, non-residential building, and infrastructure investment,” Stats NZ added.
“Expenditure on transport equipment and plant, machinery, and equipment also rose in the quarter.”
Good and services exports rose 7.8 per cent, with higher exports of dairy products, travel services, and meat products.
Somewhat offsetting these increases were falls in central government expenditure and household consumption.
The data released this morning captured the rebound out of last year’s lockdown and followed a 1.7 per cent lift in the June quarter.
Both Treasury and the Reserve Bank have been forecasting a recession in 2023 - likely in the second half of the year.
