New Zealand Economy Rebounds with 1.1 Percent Growth in September 2025 Quarter

New Zealand's economy rebounded decisively in the September 2025 quarter, registering growth of 1.1 percent as measured by gross domestic product. This represents a significant recovery following a contraction of 1.0 percent in the June 2025 quarter, signaling renewed economic momentum after a difficult first half of the year. However, the broader annual picture remains challenging, with GDP declining 0.5 percent over the year ended September 2025 compared with the same period in the previous year.

Economic activity as measured through expenditure on GDP demonstrated stronger performance, rising 1.3 percent in the September quarter after falling 0.8 percent in the previous quarter. This improvement in spending indicates that both business and consumer activity have begun accelerating following a prolonged period of weakness. Over the full year to September 2025, expenditure on GDP declined 0.2 percent compared with the year ended September 2024, reflecting the cumulative impact of economic challenges throughout the year.

Manufacturing emerged as a standout performer, expanding 2.2 percent in the quarter. The manufacturing sector was driven by multiple subsectors including food, beverage, and tobacco product manufacturing, transport equipment and machinery manufacturing, and petroleum, chemical, polymer, and rubber product manufacturing. This broad-based strength across multiple manufacturing categories suggests that the sector is responding to both domestic demand improvements and export opportunities.

Construction activity also contributed meaningfully to quarterly growth, expanding 1.7 percent. The construction sector's recovery was driven entirely by construction services, indicating increased activity in building and infrastructure projects across the economy. Business services rounded out the major growth drivers, rising 1.6 percent through gains in computer system design and related services, advertising and market research services, and scientific, architectural, and engineering services.

The primary industries sector grew 1.0 percent following weakness in the previous quarter. Within this sector, agriculture, forestry, and fishing expanded 1.0 percent, while mining rebounded from severe contraction the previous quarter with growth of 0.7 percent. These improvements suggest that primary sector activity is stabilizing after a prolonged period of weakness in agricultural and mining production.

A notable drag on quarterly GDP growth came from the information media and telecommunications sector, which contracted 2.1 percent. The decline was driven by weakness across telecommunications services, internet service providers, web search portals, data processing services, motion picture and sound recording activities, and publishing sectors. This performance suggests ongoing challenges in the technology and media sectors despite growth elsewhere in the economy.

On the expenditure side, exports of goods and services provided substantial momentum, expanding 3.3 percent in the quarter. Travel services led the export increase, along with dairy product exports and other services including insurance. This robust export growth reflects both international demand recovery and price competitiveness of New Zealand's goods and services internationally. Gross fixed capital formation also contributed positively, rising 3.2 percent driven by investment in transport equipment and plant, machinery, and equipment.

Offsetting these gains was a 2.5 percent increase in imports of goods and services, driven by increased imports of total capital goods, passenger motor cars, and refined petroleum. Import growth typically reflects expanding domestic economic activity and investment intentions by businesses. While import growth outpaced quarterly GDP growth, it remained manageable compared with export dynamics.

Household consumption expanded modestly, growing 0.1 percent in the quarter. This muted consumer spending reflects ongoing challenges in household finances despite improving economic conditions. Government consumption expenditure improved, with general government expenditure rising 1.3 percent driven by both central and local government spending increases. Local government expenditure showed particular strength, expanding 3.6 percent.

Real purchasing power for New Zealand residents expanded in the September quarter, with real gross national disposable income rising 0.7 percent. This measure accounts not only for domestic production but also the country's ability to command goods and services through its disposable income, factoring in terms of trade, investment income flows, and transfer payments with the rest of the world. On a per capita basis, real gross national disposable income rose 0.5 percent when accounting for population growth of 0.2 percent.

Over the full year to September 2025, real gross national disposable income expanded 1.3 percent, while per capita disposable income grew 0.5 percent. Economic activity combined with net transfer flows contributed to the increase, though this was partially offset by adverse movements in the terms of trade and net investment income. Export prices declined 1.6 percent during the quarter while import prices rose 0.5 percent, indicating a deterioration in the terms of trade that reduces the purchasing power derived from domestic production.

In international comparison, New Zealand's quarterly growth rate of 1.1 percent places the country among better-performing developed economies. Australia recorded quarterly growth of 0.4 percent, Canada 0.6 percent, the Euro area 0.3 percent, the European Union 0.4 percent, and the United Kingdom 0.1 percent. Only China and Japan showed quarterly movements comparable to or exceeding New Zealand's performance, with China recording 1.1 percent growth and Japan experiencing a contraction of 0.6 percent.

The September 2025 quarter represents a turning point for the New Zealand economy after sustained weakness through much of 2025. The broad-based nature of growth across manufacturing, construction, business services, and exports suggests that the recovery reflects genuine demand improvements rather than temporary factors. However, the annual decline and muted household consumption growth indicate that normalization remains incomplete, with further strengthening needed to restore trend growth rates and rebuild household confidence.

The recovery was underpinned by significant methodological updates and annual benchmarking processes that reconcile quarterly estimates with comprehensive annual national accounts data. These updates incorporated supply-use balancing from new annual data released in November 2025, ensuring that structural changes in the economy are properly reflected in quarterly growth measures.