Spending across the country fell 2.8 percent in the latest data, with households acting cautiously. File photo. Photo: 123RF
The New Zealand economy is still slowing down and rising unemployment is not helping, according to new data.
Infometrics' quarterly economic monitor shows activity was flat in the three months to September compared to a year ago, showing a longer term trend of softening.
Principal economist Brad Olsen said spending fell 2.8 percent in the quarter, with households acting cautiously in response to the ongoing tough conditions.
He said there were also fewer jobs available across the country with a 0.5 percent drop in national employment.
"We think job losses are likely to continue to weigh on people's expectations and spendings. While there are better interest rates to come people are worried about their jobs, and if they're worried about their jobs, if unemployment is higher, they won't be spending quite as much."
Olsen said rural economies were under the greatest pressure due to production in the primary sector taking a hit.
Economic activity in provincial and rural areas fell 0.3 and 0.4 percent respectively in the year to September, while metro areas rose slightly by 0.1 percent.
"The primary sector has been under a lot of pressure and so has a lot of primary sector-based manufacturing. You look at particularly the likes of wood product manufacturing across the country being hit over the September quarter, we had very high energy prices, we had not as much manufacturing going on because of those high input prices that has limited economic activity across the regions," said Olsen.
But he said green shoots were starting to appear for primary sector.
"We're seeing better prices for dairy, stronger prices for meat recovering off some lows but forestry still remaining quite challenging. A bit of a mixed bag, tough at the moment but perhaps better things to come, particularly with the Fonterra milk price having increased recently.
"On current production levels, that milk price would deliver around $18.1 billion for the payouts across the country in the current season. That's $3.4 billion more than the prior season so again more money starting to flow through."
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