The good news continues:
Labour productivity increased 2.1 percent in the March 2013 year, Statistics New Zealand said today. This is higher than the average annual rate of 1.6 percent for the 17-year period since 1996, when the series began.
“The 2.1 percent increase in labour productivity was driven by both an increase of 1.2 percent in multifactor productivity and a 0.9 percent growth in the amount of capital available per worker,” national accounts manager Michele Lloyd said.
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.
In the March 2013 year, multifactor productivity, which measures how efficiently goods and services are produced in the economy, grew 1.2 percent. This was because outputs (goods and services) grew faster than the inputs (hours of labour, and capital, like land and buildings) used to produce them. Growth in this area shows more efficient production and is often associated with technological change, 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.
Productivity is one of the positive indicators which has been lagging.
The improvement means production is more efficient and that an important ingredient in economic growth.