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Recovery progress slow and uneven
Recovery progress slow and uneven
While the economy is coming out of recession, the progress is slow and uneven, with continuing concerns for jobs and wages and a need for government stimulus, says the Council of Trade Unions. Although the economy grew by 0.6 percent (as expected) in the three months to March, that was slower than the 0.9 percent in the three months to December 2009.
This makes a total fall in the country’s output of 0.4 percent for the year, but output per person fell by a hefty 1.6 percent.
The weak growth in consumption by households was confirmed. It rose by only 0.2 percent in the quarter, indicating caution and little real wage growth, and showing much less recovery than its 0.8 percent growth in the December quarter.
“It is also important to remember that the economy’s production is still behind where it was in March 2008 at the beginning of the recession. It is only 1.0 percent ahead of the March 2007 year. While we are now on the way up, it is out of a deep hole; the risks and pain are not over for many people, and there is still a need for government stimulus,” said CTU Economist and Policy Director Bill Rosenberg.
One of the weakest legs of the recovery, investment, did show growth after a large fall in the three months to December, but the 0.8 percent increase was largely driven by increased exploration activity. It was down a huge 9.5 percent for the year to March. Investment in fixed assets is still at its lowest since 2004 on an annual basis.
Government expenditure on infrastructure helped in the March quarter, shown by a 2.5 percent rise in construction of roads, bridges and similar projects. However investment in non-residential building and transport equipment were both down (3.5 percent and 3.1 percent respectively).
“The increase in investment is weak and patchy, meaning there are still grounds for concern at the strength and sustainability of the recovery,” said Rosenberg.
Manufacturing continues its recovery, with a welcome 1.6 percent growth in the quarter, but manufacturing output for the year to March is still the lowest it has been since 2000. It has been helped by a few months of a low exchange rate against the Australian dollar which has now largely been reversed. While most manufacturing sectors increased output, food, beverage, and tobacco manufacturing fell 2.5 percent.
Construction, another big casualty of the recession, also increased output, by 1.0 percent but on an annual basis is at its lowest since 2003.
Services are weak, with no increase in the quarter. Government administration and defence was down 0.6 percent, while retail, accommodation and restaurants, finance, insurance and business services, and transport and communication production all fell too. Wholesale trade and personal and community services were among the increases.
ENDS
New Zealand Council of Trade Unions
Te Kauae Kaimahi
The New Zealand Council of Trade Unions Te Kauae Kaimahi brings together over 350,000 New Zealand union members in 40 affiliated unions. We are the united voice for working people and their families in New Zealand.
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