23 Mar 2012

Economic growth slowed at end of 2011

7:51 am on 23 March 2012

The pace of economic growth slowed in the final three months of last year, according to official figures.

Statistics New Zealand figures show gross domestic product (GDP) a broad measure of the health of the economy, grew 0.3% in the December quarter, the fifth consecutive quarterly rise.

But the increase was less than the 0.7% rise in the previous quarter.

The biggest contributors to the growth, finance, insurance and business services, were up 1.3%.

Agriculture, boosted by record dairy production, was up 3.5%.

But the same strong growing conditions that boosted dairy production delayed the slaughter of livestock, helping drag down food manufacturing output, which fell by 2.5%.

Construction output rose, following three consecutive quarters of decline.

Retail, accommodation, and restaurant activity, up 2.2% due to the Rugby World Cup, was at its highest level since at least 1987.

But overall the pace of the recovery remains slow.

Growth was just 1.8% for the last calendar year, while the level of production is still below its 2007 peak.

Westpac chief economist Dominick Stephens says spending on appliances, whiteware and food led higher household spending.

"It's actually the fact that the economy was 1.4% bigger in 2011 than it was in 2010 ... we did have a very disruptive earthquake yet we still produced more goods and services measured over the year as a whole - so it's not that bad a result," he says.

He says in 2012 the construction sector is expected to go from fairly weak to steadily increasing in its volume of activity propelling GDP growth to a stronger level.

Mr Stephens says where as GDP growth was 1.4% in 2011, it's expected to increase to 2.8% in 2012.