NZ economy contracts unexpectedly in September quarter

The news: New Zealand's economy unexpectedly contracted in the third quarter as industrial activity slowed and household spending eased amid high interest rates.

The numbers: Data from Statistics New Zealand data on Thursday showed gross domestic product (GDP) fell 0.3% in the September quarter, down from a revised 0.5% increase in the second quarter and lower than forecasts of a 0.2% rise. Annual GDP decreased 0.6%, against an expected increase of 0.5%.

The context: While eight of the country's 11 industry categories grew in the quarter, all goods-producing industries were down, led by a fall in manufacturing. The weaker-than-expected GDP will ease concerns for the Reserve Bank of New Zealand, which has repeatedly said it needs slower economic growth to dampen inflation and inflation expectations. The NZ central bank has undertaken its most aggressive policy tightening since 1999, lifting the official cash rate by 525 basis points since October 2021 to 5.50%.