3 February

The seasonally adjusted unemployment rate rose to 6.8 percent in the December quarter from 6.4 percent in the September quarter necessitating a policy reaction from the Government to encourage an increase in business investment say the New Zealand Manufacturers and Exporters Association (NZMEA). Obstacles to new productive investment must be overcome before we will see a substantial recovery and an increase in employment.

NZMEA Chief Executive John Walley says, “It comes as no surprise that unemployment has risen again; there are very few productive firms expanding their capacity at the moment. There are some companies replacing old machines but the message is that new investment will follow a more stable economic outlook.”

“A look at this graph shows that business and agricultural investment is still weak. Comments from manufacturers are that reduced demand from weak markets is being exacerbated by a high and volatile exchange rate, discouraging any further investment.”

“We cannot simply blame overseas factors for our lack of recovery; many of our biggest trading partners are still growing. The Government needs to focus on economic rebalancing through monetary policy and tax reform.”

ENDS

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