22 September 2011
Slow growth in GDP not good for jobs outlook
The increase of only 0.1 percent in GDP in the June quarter, well below most forecasts, is not good news for reducing unemployment and raising wages, says CTU Economist, Bill Rosenberg.
“While it follows a 0.9 percent increase in the March quarter, and the Rugby World Cup may give a temporary boost to the September quarter, the result backs our continuing concerns that we are faced with a slow recovery which will not reduce unemployment fast enough.”
“The low growth in GDP is also inconsistent with confidence surveys, which over the recession have frequently showed employer intentions not being followed through into creating jobs.”
“With dark clouds gathering in the US and Europe including warnings of return to recession, and revised data on New Zealand’s net international liabilities showing our situation not as bad as previously assumed. The government should increase spending on programmes that create jobs and provide more support for people out of work. It should not continue its current focus on cutting public sector spending.”
There is an increasing risk of a slow down in exports and that the Christchurch reconstruction will not happen as quickly as had been assumed.
“Construction is still in deep trouble, falling 4.3 percent in the June quarter, and if it goes too low may have problems pulling together the resources for the Christchurch effort. Manufacturing has also fallen (0.1 percent), showing the fragility of its growth over the previous two quarters, and not boding well for New Zealand’s higher value exports.”
Per capita GDP and Real gross national disposable income, a better measure of welfare, also both fell in the quarter.
“The result shows the fragility of the economic recovery,” says Rosenberg.