Labour productivity growth sustained since 1978

Updated productivity measures, which provide fresh insight on New Zealand's economic performance from1978, have been released by Statistics New Zealand today.

Labour productivity – that is, output per unit oflabour input – grew on average by 2.2 percent annually in the measured sector from 1978 to 2006.

The growth in labour productivity was driven by average annual output growth of 2.6 percent, combined withrelatively weak labour input growth (averaging 0.4 percent annually).

The strongest period of labour productivity growth was from 1997 to 2000, where solid output growth anddeclining labour input boosted productivity by 3.5 percent annually.

From 2000 onwards, labour productivitygrowth has averaged 1.4 percent annually, compared with the 28-year average of 2.2 percent.

Average annual capital productivity decreased by 0.6 percent from 1978 to 2006, due to average annualcapital input growth of 3.3 percent outstripping output growth.

Capital productivity declined by 4.0 percenton an average annual basis from 1985 to 1990, driven by strong capital input growth.

This period coincidedwith the tail-end of the 'Think Big' projects, which resulted in significant capital and infrastructuralinvestment.

From 2000 onwards, capital productivity has fallen 0.1 percent on an average annual basis.Multifactor productivity growth averaged 1.1 percent annually from 1978 to 2006. Since 2000, annualgrowth has been below this average, at 0.7 percent.

Multifactor productivity is the growth in output thatcannot be attributed to either labour or capital. It generally results from technological change orimprovements in knowledge, methods and processes.

Coverage of the productivity measures is restricted to a subset of the economy referred to as the ‘measuredsector’.

The measured sector excludes the following industries: government administration and defence,health, education, property and business services, and personal and other community services