September 17th, 2024
Statistics New Zealand has released data showing a 2.2% increase in New Zealand's labour productivity in the year ended March 2022, the largest growth since 2010. The data indicates that the rise in labour productivity reflects an increase in output, which has grown at a faster rate than labour inputs.
The coverage of the productivity measures includes the measured sector, mainly market-sector industries that cover around three-quarters of New Zealand's economy. Non-market service industries, like education and healthcare, are not included within the measured sector.
Multifactor productivity, which captures the effects of unobserved inputs such as technological progress, efficiency gains, and economies of scale, also saw an increase of 1.2%.
Fluctuating productivity in different industries
Labour productivity indexes for different industry groups have been recorded since 1996. The measured sector has shown consistent productivity gains over the years, with an index of 1,410 in the year ended March 2022. However, primary industries, goods-producing industries, and service industries have shown fluctuating productivity growth.
The primary industries, which include agriculture, forestry, and fishing, had an index of 1,544 in the year ended March 2022, representing a 0.8% increase from the previous year. The goods-producing industries, which include manufacturing and construction, had an index of 1,248 in the year ended March 2022, representing a 0.5% increase from the previous year. Meanwhile, service industries, which include wholesale and retail trade, transportation, and accommodation, had an index of 1,479 in the year ended March 2022, representing a 1% increase from the previous year.
Contextualising the data
It is essential to note that the movements should be considered in the context of the different COVID-19 prevention measures that affected both years ended March 2021 and March 2022.
The data for the year ended March 2022 is provisional and subject to future updates.
Implications for future growth
The rise in labour productivity is a positive sign for New Zealand's economy, which is expected to have significant implications for future economic growth. A rise in productivity levels is considered essential for economic growth, competitiveness, and overall prosperity.
The data shows that New Zealand has been able to make progress in improving productivity levels despite the challenges posed by the COVID-19 pandemic. This is a promising sign for the country's economic future and underscores the importance of continued efforts to boost productivity growth across all industry groups.