The sharp increase in productivity suggests the New Zealand economy is at a tipping point, ANZ Bank’s chief economist, Cameron Bagrie, says.
Productivity figures released by Statistics New Zealand today show productivity growth in the year to March 2013 of 2.1 percent, well above the average annual rate of 1.6 percent recorded during the 17-year period since the crucial measure of economic competitiveness was first collected, and equivalent with average annual productivity growth in Australia.
The increase reflected both an increase of 1.2 percent in multifactor productivity – a complex measure of factors including skills, costs, and value added per worker – and a 0.9 percent growth in the amount of capital available per worker,” Statistics NZ said.
Bagrie said improving productivity was an unsung part of the current economic recovery.
Everyone’s looking at the obvious factors that are driving New Zealand’s renaissance,” he said, citing strong terms of trade, the Christchurch rebuild, and high population inflows, “but no one’s talking about the productivity story.”
“I reckon we hit that tipping point about the middle of last year.”
Bagrie said the productivity improvements suggested that business management was improving.
“2008 to 20012 (the recession after the global financial crisis) was a huge wake-up call for New Zealand businesses,” said Bagrie, although they had a long way to go to catch up to Australia, which remained “a moving target” despite its productivity record slowing. . . .
Productivity is a key indicator for economic performance.
If, as Bagrie says, we’ve reached a tipping point, that’s a very good sign that the growth will be sustained.