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

 

Sky City : Auckland Convention Centre Cost Jumps By A Fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out. The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill.
More>>

ALSO:

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news