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Labour Productivity Growth Lowest on Record

Labour productivity grew 0.4 percent in the measured sector for the March 2006 year,Statistics New Zealand said today.

This is below the 18-year average of 2.5 percent annual growth and down on the 2.1 percent recorded in the March 2005 year.Labour productivity growth for the March 2006 year is the lowest since the series began in 1988.

The comparatively low growth for the year ended March 2006 was driven by relatively weak output growth (1.4 percent)and sustained employment growth over the period.Labour productivity growth tends to decline when the economy slows,as firms hold on to existing staff despite easing demand.

Capital productivity decreased 2.9 percent for the March 2006 year,driven by strong growth in capital input.Average annual growth over the past 18 years has been 0.1 percent.

Multifactor productivity is growth in output that cannot be attributed to either labour or capital.It generally results from technological change or improvements in knowledge,methods and processes.Multifactor productivity fell 1.1 percent in the March 2006 year.The 18-year average growth has been 1.5 percent.

Coverage of the productivity measures is restricted to a subset of the economy referred to as the ‘measured sector ’.The measured sector excludes the following industries:government administration and defence, health,education,property and business services,and personal and other community services.

Extended productivity estimates for the measured sector,backdated to 1978,will be released later in 2007. Dallas Welch Acting Government Statistician

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