New Zealand's economy has grown at a faster pace than expected as a good start to the dairy season and increased oil and gas activity stokes activity.
Gross domestic product expanded one per cent to a seasonally-adjusted $53.87 billion in the three months ended September 30, ahead of the 0.7 per cent forecast in a Reuters poll of economists.
It grew 0.7 per cent pace in the June quarter, according to Statistics New Zealand.
The annual pace of economic growth edged up to 2.9 per cent from a revised 2.8 per cent pace in the June quarter.
The New Zealand dollar spiked briefly at 77.44 cents on the announcement but dropped back to 76.97 US cents, from 76.93 cents just before the 10.45am release.
Primary production led the quarterly expansion with agricultural activity growing 4.7 per cent on increased milk production and an eight per cent lift in mining activity, which was driven by increased oil exploration and oil and gas extraction.
Primary sector activity grew 1.7 per cent on an annual basis, led by a 3.9 per cent increased in mining production.
"This is some of the strongest growth in the primary industries for 15 years," national accounts manager Gary Dunnet said. "Milk production had a good start to the season, while oil exploration, and oil and gas extraction also grew."
Treasury forecasts this week expect economic growth will peak in March 2015 as growth in the booming construction sector slows down and as falling global dairy prices weigh on export receipts.
However, the tepid pace of inflation has surprised forecasters and the economy is now expected to have greater potential output without putting strain on consumer prices.
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