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NZ manufacturing sector to make neutral contribution to Q2 GDP - ANZ

FXStreet (Bali) - Following a weak manufacturing sales (Q2) in New Zealand, coming at -0.7% vs 0.2% last, Mark Smith, Senior Economist at ANZ, notes that the manufacturing sector is set to make a broadly neutral contribution to Q2 GDP.

Key Quotes

Lifting construction sector activity will remain an important source of support to the manufacturing sector, although the still high NZD and lower commodity price backdrop suggests tougher times ahead.

Meat and dairy volumes declined 1.4% sa, consistent with other indicators pointing to a Q2 fall for this component.

Of more relevance for quarterly GDP was the 0.1% rise in ex meat and dairy volumes, which was considerably weaker than signalled by upbeat business sentiment measures.

Our seasonally adjusted estimates suggest there was a 2.6% fall in core manufacturing inventories in Q2, which will further weigh on Q2 GDP.

We expect the manufacturing sector to make a broadly neutral contribution to Q2 GDP, with our Q2 GDP pick +0.4%.

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