Economy almost becalmed but so

SOME Wellington manufacturers are "far too busy" and growing internationally, despite the economy almost standing still, up just 0.2 per cent in the June quarter.

The economy barely grew in the June quarter after a 4 per cent slump in manufacturing offset the biggest rise in construction for almost seven years. The biggest fall was in the manufacturing of food, with the impact Replica gucci of the Northland drought on slaughter numbers and milk production.

Household spending was soft as people saved more and repaid debt, especially spending less on phone calls, while there was also a huge rundown in business inventories. The bright spot was a rise in business investment.

The overall result was well down on economists' expectations of growth of about 0.8 per cent.

Berl chief economist Ganesh Nana said the central bank made a mistake putting up rates from 2.5 per cent to 3 per cent earlier this year. "Clearly, the economy is not recovering as well as planned," he said, adding that people should not assume a rapid return to business as usual, with the official interest rate expected to be on hold until March.

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Infometrics managing director Gareth Kiernan said the GDP figures were "surprisingly bad", especially a rundown in stock levels, considering other indicators in recent times. "But it does back up why people feel things are still not that flash."

Nationally, manufacturing has been on a long-term slide, down about 18 per cent on 2005.

However, Lower Hutt fire engine maker Fraser Engineering says it is booming. "We are far too busy for a recession - we Replica gucci are in rapid growth mode," said general manager Martin Simpson.

The company makes about 60 fire engines a year, each worth an average of $500,000, and up to $1.2 million. It has about 90 staff and a target of 100 units in the next year. Most of the engines are sold in New Zealand, with the balance going to Australia. But it aims to export worldwide. "We are looking to be a $1 billion company, not a $100m-a-year company," Mr Simpson said. The Australian economy was growing so fast it needed "hundreds of fire engines just to keep up".

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Wellington timber processing and milk drying equipment maker Windsor Engineering said it had good orders in the first half of the year and was positive "but very cautious". "We are not seeing the same level of new inquiry we were seeing six months ago," chief executive Peter McKee said.

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The workload was up on 18 months ago and was expected to continue to rise into next year.

Wellington merino wool clothing maker Icebreaker said overall business "is good and we are still growing". It saw signs of a lift in the United States.

Key Points

June-quarter gross domestic product:

Up 0.2 per cent (average forecast: 0.8 per cent)

Manufacturing: Down 4 per cent

Construction: Up 6.4 per cent

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Finance, insurance and business services: up 0.5 per cent

Communication services: Down 2.6 per cent, for third quarter, with lower phone use

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