Key results

Quarterly change: +0.2% (last: +0.9%, revised from +0.8%)

Westpac f/c: +0.2%, market f/c: +0.1%, RBNZ: 0.0%

Annual change: +2.6% (last: +1.7%, revised from +1.5%)

Westpac f/c: +2.4%

The June quarter national accounts reinforce our message that the New Zealand economy has largely held its ground through the US-Iran conflict, though it hasn’t been completely unscathed. A few sectors in particular have taken the brunt of the surge in fuel prices since March, but the greater impact is probably more a matter of what might have been: the momentum that was building in late 2025 and early 2026 might have progressed further were it not for this latest headwind.

GDP rose by 0.2% for the quarter, in line with our forecast. This was slightly ahead of the median market forecast of 0.1% and the RBNZ’s forecast of a flat outturn in their September Monetary Policy Statement (which didn’t have the benefit of the final data releases that led us and the market to upgrade our forecasts).

As expected, the largest growth contribution came from construction, up 2.7%. There were also solid contributions from manufacturing, wholesaling, and information and telecommunications. The main declines were in transport and hospitality, which likely reflects the impact of the surge in fuel prices – households have tightened their belts by cutting back on travel in particular.

It was a ‘high’ read for the quarter – 0.247% unrounded – and March quarter growth was revised up from 0.8% to 0.9%, largely due to updated data on construction activity. Together these meant that annual growth accelerated to 2.6%, ahead of our 2.4% estimate.

However, the results for the June quarter were a little weaker in the details than we were expecting. Firstly, the non-additive balancing item (as we calculate it, which is a little different from what Stats NZ reports) knocked around 0.2ppts off growth for the quarter, less than the 0.3ppts that we had assumed.

Furthermore, we were surprised to the downside on balance for the ‘market’ sectors of the economy, with softer than expected results in agriculture, transport and administrative services. The latter two will likely reflect the impact of higher fuel prices on travel and tourism (admin services includes tour operators and travel agencies). In contrast, there were surprisingly large gains in healthcare (up 0.8%) and central government administration (up 2.1%, though this came after a 0.8% fall in the March quarter).

For the RBNZ, these results will help to assuage some of the committee members’ concerns about downside risks to growth. But our view remains that the committee will have more of an eye to the evidence on inflation pressures, such as the NZIER business survey on the 6^th of October and the CPI on the 22^nd, as well as the rapidly shifting picture for oil prices, to determine their next move.

Michael Gordon, Senior Economist

P: +64 21 749 506

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