WELLINGTON (Reuters) - New Zealand's economy grew at a faster than expected pace in the third quarter boosted by robust retail spending, the government said on Thursday, briefly sending the Kiwi dollar higher.
The statistics office said New Zealand's gross domestic product (GDP) grew 0.7% quarter-on-quarter in the three months to September, stronger than the 0.5% pace recorded in the second quarter.
The figure was higher than 0.6% GDP growth forecasted in a Reuters poll of analysts. The data was higher than the central bank's forecast of 0.3% for the quarter earlier this year.
The GDP numbers moved the Kiwi dollar <NZD=> up 0.2% to $0.6610 but quickly fell back.
The Reserve Bank of New Zealand (RBNZ) cut interest rates by a surprise 50 basis points in August to fire up the economy that had been sluggish this year because of growing global risks to the small open economy and sinking business and consumer sentiment.
The government this month announced a significant lift in capital spending to bolster the economy with a plan to invest more than NZ$12 billion ($7.7 billion) on infrastructure projects. [nL4N28L079]
"Retail industry growth of 2.4 percent in the quarter was boosted by robust spending on electronics," Statistics NZ said in a statement. Expenditure on GDP rose 0.6 percent in the quarter, buoyed by the higher household spending.
Service industries, which make up about two-thirds of the economy, grew 0.4 percent this quarter, following 0.8 percent growth last quarter, the statement said.
The GDP growth for the previous quarter was however heavily revised downward to 0.1% from 0.5%, the statement said. The year-on-year GDP growth was 2.3%, compared to 2.1% in the prior period.
Analysts said that while growth in the September quarter was stronger than expected, the revised figures show GDP growth decelerated more sharply than previously believed over 2019.
"While the September quarter result was substantially stronger than the Reserve Bank’s forecast of 0.3%, the bigger issue will be how they treat the revisions to history," Westpac Senior Economist Michael Gordon said in a note.
The RBNZ surprised markets by keeping rates unchanged in November, but left the door open to a further cut which some economists thought would take place in the new year.
"The RBNZ will be reassured by the fact that growth was much stronger than they had forecast, so a February rate cut is now looking unlikely," Ben Udy of Capital Economics said in a note.
(Reporting by Praveen Menon; editing by Grant McCool)
