Brian Fallow : Things have stopped getting worse

NZ Herald economics editor Brian Fallow.

The economy managed - just - to expand in the June quarter, most likely marking the end of the recession which began at the start of 2008.

The increase of 0.1 per cent in gross domestic product was better than most economists - ASB's were the notable exception - had forecast.

It remains possible that that uptick will be revised away, just as the March quarter's originally reported 1 per cent decline has been revised to a 0.8 per cent decline.

Nevertheless most of the partial indicators for the September quarter indicate an improvement, suggesting that a turning point has been passed.

If it has, the cumulative decline in the level of economic activity, peak to trough, will have been 2.9 per cent, over a period when in normal times the economy would have expanded by at least a similar amount.

The quality of the latest pick-up is uninspiring, however. Less stuff was manufactured, fewer homes were built, but that was offset by more activity among real esate agents and mortgage brokers as housing market activity increased.

With unemployment, a lagging indicator, set to get worse before it gets better today's national accounts are unlikely to be greeted by a Hallelujah Chorus.

But the bottom line is that before the econony can improve it has to stop getting worse. That seems to have happened.