Postponement of GDP disclosure leaves economists wondering

Jane Turner
Jane Turner
The week-long postponement by Statistics New Zealand on releasing the second quarter GDP (gross domestic product) data has economists querying whether it portends good or bad news in the wake of the February quakes in Christchurch.

Last week's "11th hour" postponement had BNZ economist Craig Ebert wondering if there is a "spanner in the works" because of the extent of further damage to Christchurch from the February quakes, while ASB economist Jane Turner speculated on the possibility of a "wild number" requiring extra time to be rechecked by SNZ.

"There is nothing obvious to suggest that is the case. But there has always been more scope than usual for surprise," Ms Turner said.

The markets in general are expecting a 0.4% gain in GDP, the Reserve Bank 0.3%, BNZ is forecasting 0.4% and ASB 0.5% when the data is released today.

Ms Turner said accounting statistically for the earthquakes' impact on Canterbury's economic activity would have been a challenging job to do accurately, as would forecasting, noting some other recent data releases had been incomplete.

She said the range of GDP expectations was between -0.2% to +0.8% and that the June monetary policy statement by the Reserve Bank incorporated 0.3% growth, which at the time "seemed ambitious".

"We have revised our forecast up substantially in recent weeks on strong data," she said in a statement.

Retail sales for the first quarter were "robust" outside Canterbury, and more than made up for the disruption in Christchurch. Similarly, nationwide manufacturing sales were "pleasingly strong".

Mr Ebert, forecasting 0.4% growth, did not discount the possibility of a shift as much as 0.6%, but offsetting that could be a major plunge in one of the many components within GDP data.

On the positive ledger for the quarter to March had been a "solid rebound" in manufacturing, a "bounce back" in dairy production, gains in forestry, a "reasonable" increase in consumer spending and "lift" in spending on plant and machinery.

Mr Ebert said the standout negatives for the quarter were expected to come from residential and commercial construction, accommodation and hospitality and the mining sector, with less coal-fired energy production and a downturn after the maintenance shutdown of Maui oil and gas fields.

- simon.hartley@odt.co.nz

 

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