GDP surge hits 3.9pc

By BRIAN FALLOW

The economy powered ahead in the September quarter, propelled by strong demand for new houses and appliances, furniture and vehicles.

Economic activity increased 1 per cent, pushing annual average growth in gross domestic product to 3.9 per cent, its strongest for two years, Statistics New Zealand said.

Economists said that was well above New Zealand's potential or sustainable growth rate, generally thought to be 3 per cent at the most, and would add to the pressure on resources and inflation.

However the level of global economic and political uncertainty is expected to keep the Reserve Bank in wait-and-see mode well into the new year.

Bank of New Zealand economists said the quarterly figure overstated the strength of underlying activity.



Manufacturing was up 2.9 per cent, but most of that reflected a statistical reclassification from the wholesale trade sector arising from the restructuring of the dairy industry. Adjusting for that, manufacturing activity was up 0.6 per cent.

The solid foundation for the quarter's 1 per cent growth was buoyant construction activity, up 11 per cent in the quarter and up 14.3 per cent on the same period last year.

And the retailing, accommodation and restaurant services were also 1.4 per cent higher as households and tourists maintained their spending.