17 Nov 2011

Conflicting indicators make economic growth hard to predict

8:35 am on 17 November 2011

An indicator of economic growth shows New Zealand is likely to have posted solid growth in the September quarter - but the previous quarter could put that in doubt.

The National Bank Regional Trends survey, which can be considered a broad guide to the economy's performance, shows activity rose 0.6% in the three months to the end of September.

However, last quarter the survey measured 1.1% growth and the official reading of GDP came in at just 0.1%.

National Bank economist Steve Edwards says there's too much uncertainty to take the survey as a reading for potential GDP, although it's been relied on in the past.

He says the global financial crisis and the Canterbury earthquake means the current environment is anything but typical.

Mr Edwards says the recovery is still patchy.

He says some indicators such as business and consumer confidence and financial conditions suggest the economy should grow 3.5% to 4% over the next 12 months.

But Mr Edwards says other indicators are showing a likely period of sluggish growth.

Official third quarter GDP data is due on 22 December, with early forecasts ranging between 0.5% and 0.9%.