Solid but not spectacular results are expected from the national accounts due to be released tomorrow and Friday.
Indicators have been suggesting for several months economic growth in the March quarter would be solid but something less than the 0.9% quarterly pace seen in the second half of last year.
Westpac senior economist Michael Gordon said said the soft manufacturing and wholesale trade surveys last week prompted him to revise down his gross domestic product (GDP) forecast from 0.7% to 0.6%. Figures will be released by Statistics New Zealand on Thursday.
A further slight narrowing of the current account deficit was expected as weak dairy prices were offset by positive factors last year.
The largest contribution to productive GDP would almost certainly come from the construction sector, he said.
There was a surge in consents over the second half of last year which translated into more building activity early this year.
There had been some issues with seasonally adjusting the construction figures recently, due to a change in the building work.
"We're not sure what the published growth rate will be. However, we expect it to be a strong number in any circumstance and this issue doesn't affect the calculation of total GDP.''
The main negative factor expected for the quarter was meat processing, Mr Gordon said.
During the second half of last year, low dairy prices and the possibility of an El Nino drought prompted a much larger than usual cull of both sheep and cattle. That boosted GDP in the September and December quarters but the payback would be seen in March. The early cull meant fewer animals available later in the season.
The impact on GDP should be temporary and the level of meat processing was likely to return to normal in the June quarter.
Otherwise, many of the primary sectors had a "reasonable'' quarter, he said.
Milk production was up slightly in seasonally adjusted terms and forestry, fruit and wine all had strong gains. A drop in mining activity was expected due to the natural run down of output from oil wells.
Consumers appeared to have made a relatively modest contribution to growth for the quarter, Mr Gordon said.
The 1% rise expected for retail sales was less than the average of the last few years, even after the boost from rising tourist numbers.
"This may be linked to the housing market being subdued at the start of the year, following last year's investor regulations. House prices have since regained their ground so we may see a perkier consumer in the June quarter.''
The annual current account deficit was expected to narrow slightly to 3% of GDP, making it the smallest deficit since September 2014, he said.
The plunge in world dairy prices had hit export earnings over the last two years but there had been a variety of positive factors during that time.
In the latest quarter there were two factors in particular to note. The renewed plunge in world oil prices reduced New Zealand's import bill and tourist numbers continued to surge this year. The services trade surplus was expected to top $1billion in seasonally adjusted terms for the first time, he said.
Other data out this week in New Zealand included a GlobalDairyTrade auction early tomorrow.
ASB economists expected a small dairy price rise overall. Whole milk powder prices fell at the previous auction, as the New Zealand production season ended better than expected, although production was still down for the season as a whole.
As the new season got under way, production was expected to fall significantly as the low opening price squeezed farm cash flows, ASB chief economist Nick Tuffley said yesterday.
Futures pricing suggested a whole milk power price rise of between 1% and 3%. Not surprisingly, the suggested price lift centred on the later-dated contracts, reflecting next season's production squeeze.
