"Household spending was up 1.9 percent, with Kiwis spending more on going away, eating out, and furnishing their houses".
-Gary Dunnet, Statistics New Zealand National Accounts Manager
New Zealand's economy expanded slightly less than expected during the second quarter while the solid output figures, spurred by strong export and domestic demand, may temper rate cut expectations. According to the data released by Statistics New Zealand, gross domestic product increased a seasonally adjusted 0.9% in the second quarter versus the prior quarter and 3.6% on the yearly basis. Meanwhile, economists polled by Reuters forecasted 1.1% growth on the quarter and 3.7% on the year. The housing market helped stimulate the economy, as construction jumped 5% which in turn boosted activity in the manufacturing and services sector. As a result, glass, cement and concrete production went up, while real estate services grew due to the rise in property sales. Although, higher investment also implies more money being injected into the building of houses. Therefore, household spending advanced 1.9%, showing its fastest quarterly pace in seven years.
In the meantime, the New Zealand Dollar fell after second quarter GDP data disappointed, possibly fueling RBNZ rate cut speculation.
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