WELLINGTON (Reuters) - New Zealand's economic growth slowed further in the first quarter, as expected, underscoring the central bank's case to keep interest rates low for some time.
Gross domestic product (GDP) expanded 0.5 percent in the first three months of this year, easing slightly from 0.6 percent growth in the previous quarter, government data showed on Thursday.
The reading matched a median market forecast but was below a 0.7 percent rise projected by the Reserve Bank of New Zealand (RBNZ). The annual growth rate was 2.7 percent, down from a revised 2.8 percent at the end of 2017.
The slowdown suggests New Zealand's economy, which has experienced average quarterly growth of 0.9 percent since 2014, may be in for a soft patch as a cooling housing market and weak business sentiment cloud the outlook.
The soft reading would also reinforce the RBNZ's view that interest rates should remain at the current record low level while it works to boost tepid inflation.
"Household spending on services was held back by reduced spending on second-hand vehicles, petrol, and clothing," said Statistics New Zealand National Accounts Senior Manager Gary Dunnet in an emailed statement.
Economists have seen weak spots appear in the economy as skills shortages held businesses back and immigration slowed after conditions for skilled migrant visas were tightened.
Concerns have also emerged that persistently weak business confidence since the centre-left Labour-led government took office in October could hurt business activity and spending.
New Zealand's consumer confidence dipped in the second quarter from the January-March period, a survey by Westpac Bank showed, as a cooling housing market undermined optimism across regions and income levels.
"Overall, these data provide further evidence that the end of the migration and housing booms are taking their toll on the economy. And these drags will only become bigger over the next year or two," said Paul Dales, chief Australia & New Zealand economist at Capital Economics.
(Reporting by Leika Kihara; Editing by Eric Meijer)
