New Zealand’s economy recorded a stronger-than-expected rebound in Q3, with production-based GDP rising 1.1% q/q and expenditure-based GDP increasing 1.3% q/q — both beating forecasts. Growth was broad-based across 14 of 16 sectors, driven by manufacturing, business services, and construction. Only telecommunications and education contracted. Exports also strengthened, supported by dairy and meat products, although household spending remained weak. Despite the positive quarterly surprise, annual growth is still slightly negative, reflecting an economy that is recovering but not yet fully stabilized.
The stronger Q3 data support the view that New Zealand has emerged from the mid-year slump, but recent monthly indicators suggest that momentum may have softened again heading into Q4. Consumer sentiment remains weak, and labor-market concerns persist, even as the RBNZ signals that the easing cycle has ended. As a result, markets view the stronger GDP print largely as backward-looking, with monetary-policy expectations more dependent on inflation, labor-market conditions, and global factors rather than past growth surprises.
The New Zealand dollar’s reaction was muted, and NZD remains one of the weaker G10 currencies today. NZDUSD initially ticked higher but quickly lost momentum and later traded near 0.5760. The subdued — at times slightly negative — reaction reflects the view that stronger GDP numbers do not meaningfully alter expectations for RBNZ policy.
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