New Zealand’s economy kept growing through the fuel price shock of the June quarter, with a burst of house building doing much of the lifting while hospitality, accommodation and road transport went backwards.
Gross domestic product rose 0.2 percent in the three months to June, Stats NZ said on Thursday. That followed growth of 0.9 percent in the March quarter. Over the year ended June 2026 the economy grew 1.7 percent compared with the year before, and RNZ reported that output was 2.6 percent higher than in the June quarter of 2025. It was the fourth quarter of growth in a row.
“The 0.2 percent growth in economic activity in the June 2026 quarter reflects mixed results, with increases in nine out of 16 industries,” Stats NZ general manager and macroeconomic spokesperson Jason Attewell said in a statement.
The quarter was dominated by the conflict between the United States and Iran and the jump in petrol and diesel prices that came with it. Economists had worried the fuel shock would wipe out the solid start to the year. The figures suggest households and businesses pulled back in the places most exposed to fuel costs, but not enough to stall the wider economy.
Construction was the biggest single driver, up 2.7 percent. According to the full information release, that was the largest rise in construction activity since the June 2023 quarter, with construction services and residential building both contributing.
“An increase in residential building activity contributed to the overall growth in the construction industry in the June 2026 quarter,” Attewell said.
Spending on new homes shows up on the expenditure side too. Gross fixed capital formation, which measures investment in things like buildings, plant and machinery, rose 1.5 percent, led by a 4.4 percent increase in residential building work.
Public administration and safety grew 2.0 percent on the back of central government administration and justice. Health care and social assistance rose 0.8 percent, and wholesale trade lifted 1.3 percent, helped by machinery and equipment wholesaling.
The weak spots were the industries that live and die by fuel prices and discretionary spending. Transport, postal and warehousing fell 1.7 percent, driven by road transport and transport support services. Retail trade and accommodation dropped 1.0 percent, with accommodation and food and beverage services the main drags. RNZ reported that Stats NZ pointed to lower fuel retail volumes as a sign of the impact of higher prices, and that accommodation and food services on their own fell 3.8 percent.
Exporters had a strong quarter. Export volumes rose 3.3 percent, led by meat products (up 10.3 percent), other food, beverages and tobacco (up 7.2 percent) and dairy products (up 3.3 percent). Attewell said demand from the United States for New Zealand beef helped drive the rise in meat exports.
Import volumes fell 0.8 percent. Services imports were down 3.7 percent, with travel services down 6.4 percent and transport services down 7.5 percent.
Household spending barely moved. The expenditure measure of GDP rose 0.4 percent overall, but household final consumption expenditure grew only 0.1 percent in the quarter, and central government consumption spending fell 2.0 percent after strong growth earlier in the year.
For individual New Zealanders the picture is thinner still. GDP per capita, which divides output by the population, rose just 0.1 percent. Real gross national disposable income, a measure of the country’s purchasing power that takes account of the prices paid for imports such as fuel, fell 0.4 percent in the quarter. RNZ reported that it was still 2.5 percent ahead of a year earlier.
Infometrics economist Brad Olsen told RNZ that forecasters had braced for a sharper pullback when fuel prices first spiked, both because of the higher costs and because uncertainty would make people cautious. That caution did appear, he said, but “people still got out – and did quite a bit.”
Olsen said construction was perhaps the biggest surprise, carrying momentum from a rising number of building consents despite higher costs. He said hospitality and parts of tourism had softened as expected because households spending more on fuel had less left over for travel and eating out.
The result lands in the middle of a tightening cycle. The Reserve Bank lifted the official cash rate to 2.75 percent at its most recent review and signalled more rises may be needed to rein in inflation, which RNZ noted is running at 4 percent. Financial markets are narrowly picking another increase, to 3.0 percent, at the next Monetary Policy Review on 28 October, RNZ reported.
Olsen cautioned that the GDP numbers are already dated, with global oil prices still above US$100 a barrel.
“The biggest worry at the moment, right, is these GDP figures we’re talking about, they’re three months old,” he said.
That puts the Reserve Bank in an awkward spot. Solid construction and export numbers give it less reason to hold off on rate rises, while flat household spending and falling real incomes suggest many families are already feeling squeezed.
RNZ also noted that New Zealand’s quarterly growth rate was the weakest among key trading partners including the United States, the United Kingdom, the European Union, Japan and Australia. It said economists expect growth to continue unevenly through to the end of the year and gather momentum in 2027, with global events remaining a significant influence.
Stats NZ will release GDP figures for the September quarter, which will show how the economy handled the rest of the fuel shock and higher interest rates, on 17 December 2026.
Did you notice the fuel price spike change how much you spent on eating out or travel this winter? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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