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Manufacturing Strength Drives New Zealand's Economy to Third Consecutive Quarter of Expansion

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Manufacturing Strength Drives New Zealand's Economy to Third Consecutive Quarter of Expansion

New Zealand's economy continued to expand in the March quarter as growth in the manufacturing and business services sectors helped offset weakness in mining and construction.

The country's gross domestic product increased 0.8% in the first quarter, accelerating from 0.5% growth in the previous three-month period and marking the third consecutive quarter of expansion, according to a report by the official statistics agency, StatsNZ, filed on Thursday.

The growth is slightly ahead of the 0.7% expansion forecast by BofA Securities, but short of the 1% rise expected by ANZ.

Nine out of the 16 industries in New Zealand posted an increase in activity in the first quarter, with a 1.9% jump in manufacturing representing the largest upward contribution to overall GDP growth. The business services sector grew 1.1%, and wholesale trade advanced 2.4%.

On the flip side, mining was the biggest downward contributor to GDP as activity slumped 11.6% due mainly to a fall in oil and gas extraction. The construction sector declined 1% as spending on both residential and non-residential building slid by more than 3%.

Earlier in June, the government agency said the Middle East conflict and the resulting increase in fuel prices will influence various segments of the economy, but the full impact is likely to be evident in second-quarter GDP data due for release in September.

Westpac said that while the 0.8% first-quarter growth is slightly lower than the bank's forecast, the net impact of certain revisions, including the upward revision of December 2025 quarter growth to 0.5% from 0.2%, "make this a stronger overall result than we were expecting."

ANZ echoed that sentiment, saying the result marks "a good start to the year." The data is unlikely to alter the Reserve Bank of New Zealand's thinking, ANZ said, adding that it still expects the central bank to raise its official rate by 25 basis points in July.

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