Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Sharply improved productivity suggest economic tipping point

Sharply improved productivity figures suggest economic tipping point, says Bagrie

By Pattrick Smellie

March 18 (BusinessDesk) – A sharp improvement in New Zealand’s traditionally feeble economic productivity statistics suggests the economy is at a “tipping point” for a sustained period of stronger economic growth, says the ANZ Bank’s chief economist, Cameron Bagrie.

Productivity figures released by Statistics New Zealand today show productivity growth in the year to March 2013 of 2.1 percent, well above the average annual rate of 1.6 percent recorded during the 17-year period since the crucial measure of economic competitiveness was first collected, and equivalent with average annual productivity growth in Australia.

The increase reflected both an increase of 1.2 percent in multifactor productivity – a complex measure of factors including skills, costs, and value added per worker - and a 0.9 percent growth in the amount of capital available per worker,” Statistics NZ said.

Bagrie said improving productivity was an unsung part of the current economic recovery.

Everyone’s looking at the obvious factors that are driving New Zealand’s renaissance,” he said, citing strong terms of trade, the Christchurch rebuild, and high population inflows, “but no one’s talking about the productivity story.”

“I reckon we hit that tipping point about the middle of last year.”

Bagrie said the productivity improvements suggested that business management was improving.

“2008 to 20012 (the recession after the global financial crisis) was a huge wake-up call for New Zealand businesses,” said Bagrie, although they had a long way to go to catch up to Australia, which remained “a moving target” despite its productivity record slowing.

Multi-factor productivity, at 1.2 percent growth in 2013, compared with an average annual growth rate of just 0.2 percent over the five years back to 2008, well below the average between 1996 and 2013 of 0.7 percent.

Capital deepening, indicating investment in new equipment to make businesses more efficient, rose 1.2 percent annually between 2008 and 2013, compared with 0.9 percent over the 17 year measurement series.

Labour productivity measures the quantity of goods and services (output) produced for each hour of labour. The latest figures show that 100 products could have been produced in one hour of labour in 1996, compared with 132 in one hour of labour in 2013.

Improvements in multifactor productivity mean more efficient production and are often associated with technological and organisational change, or economies of scale.

From 1996 to 2013, labour productivity grew more in Australia than in New Zealand, up by an average of 2.1 percent and 1.6 percent per year, respectively. Over the same period, Australia’s annual average output growth was also higher, at 3.5 percent compared with 2.6 percent in New Zealand.

Productivity is regarded as key to increasing New Zealand’s standard of living and is a major driver of gross domestic product – the main indicator of economic activity. Productivity statistics cover approximately 80 percent of the economy and exclude government administration and defence, health, and education.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Trade Agreements: TPP Minus US Starting To Gain Ground

The Japanese government is picking up the pace on reviving the Trans-Pacific Partnership trade and investment deal, with talks scheduled next month among the 11 countries left in the pact after the withdrawal by the US after the election of president Donald Trump. More>>

ALSO:

PACER:

Prices Up 2.2%: Annual Inflation Highest In Over Five Years

"Rising petrol prices along with the annual rise in cigarette and tobacco tax lifted inflation," prices senior manager Jason Attewell said. "Petrol prices in New Zealand are closely linked to global oil prices, and cigarettes and tobacco taxes rise in the March quarter each year". More>>

ALSO:

Undertaxed? NZ Income Tax Rate Second Lowest Among Developed Nations

New Zealand workers pay the second smallest portion of their income to the government among developed nations and less than half the average ratio of their Organisation for Economic Cooperation and Development peers. More>>

ALSO:

Cyclone Cook: Round Up Of This Week’s Weather

One of the significant impacts this week was flooding due to excessive rainfall amounts. Rainfall amounts topped out at 350mm over the past 60 hours in parts of northwest Nelson, with 200mm+ measurements recorded about Coromandel Peninsula, and between 150-200mm in the Kaimai Ranges. Rainfall amounts of between 30-50mm were commonplace elsewhere. More>>

ALSO:

Earlier: Batten Down The Hatches For Cyclone Cook

Although fast-moving, Cyclone Cook will be destructive and MetService Expert Meteorologists have issued Severe Wind Warnings for the whole of the North Island apart from Northland... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news