New Zealand\u2019s economy shrunk 0.9% in the June quarter as manufacturing activity collapsed during the start of winter and as US President Donald Trump launched his trade war.<\/p>\n
Figures released by Stats NZ on Thursday showed gross domestic product (GDP) fell almost a full percentage point in the three months ended June, with declines in most industries.<\/p>\n
\u201cThe 0.9% fall in economic activity in the June 2025 quarter is broad-based with falls in 10 out of 16 industries. GDP has now fallen in three of the last five quarters,\u201d said Jason Attewell, Stats NZ\u2019s spokesperson for economic growth.<\/p>\n
The weak June data completely erases the 0.9% gain made in the first three months of the year and will likely prompt a fresh downgrade of calendar-year economic growth forecasts.<\/p>\n
Economists at the Reserve Bank had forecast the economy would contract just 0.3% during the June quarter, while retail banks were predicting closer to 0.5%.<\/p>\n
Manufacturing saw the hardest fall. It dropped 3.5% in the quarter, led by transport equipment, machinery, and equipment manufacturing which fell 6.2%.<\/p>\n
Food, beverage, and tobacco manufacturing fell 2.2% and was reflected in decreased export volumes of products such as meat. Construction was down 1.8% in the quarter, reversing a 1.2% increase in the three months ended March.<\/p>\n
\u201cConstruction activity fell across a range of measures in June 2025 quarter, not just GDP. The value of building work put in place, a key input to GDP, fell 2.2%, and filled jobs in the construction industry fell 1.3%,\u201d Attewell said.<\/p>\n
In a note prior to the release, BNZ economists said the manufacturing sector was struggling with rising input costs such as energy, weak consumer demand, and strong competition from offshore producers.<\/p>\n
Matthew Galt, an economist at ANZ, said global uncertainty from Trump\u2019s tariff policies, which were first announced in April, seemed to have played a role in the weak quarter.<\/p>\n
\u201cThat saw firms defer their investment and employment decisions. There have also been headwinds at the household level from high food price inflation, a softening labour market, and a housing market that continues to go sideways,\u201d he wrote before the data release.<\/p>\n
Economic activity was down 1.1% on an annual basis and GDP per capita had fallen 2.1%. Overall, the New Zealand economy had contracted 1.4% or roughly $1 billion since the election in 2023.<\/p>\n
This compares unfavourably to most other countries. New Zealand\u2019s economy has shrunk 0.6% relative to the same quarter last year, while Australia has grown 1.8%, Canada 1.2%, the European Union 1.6%, and the United Kingdom 1.2%.<\/p>\n
However, New Zealand\u2019s real purchasing power rose in the June quarter. This is a measure of how many goods and services residents are able to purchase or consume. Kiwis\u2019 ability to buy goods and services rose 0.9% thanks to lower import prices and higher overseas investment income.<\/p>\n
Some economists in the data release lockup noted there was significant noise in the data and didn\u2019t expect it to change the RBNZ\u2019s overall view of the economy.<\/p>\n","protected":false},"excerpt":{"rendered":"New Zealand\u2019s economy shrunk 0.9% in the June quarter as manufacturing activity collapsed during the start of winter…\n","protected":false},"author":2,"featured_media":28676,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[42,43,40,38,41,39],"class_list":{"0":"post-28675","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-headlines","9":"tag-news","10":"tag-top-news","11":"tag-top-stories","12":"tag-topnews","13":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/28675","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=28675"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/28675\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/28676"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=28675"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=28675"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=28675"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}