David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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Will the RBNZ halt English’s rebalancing?

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In Parliament last week Finance Minister Bill English welcomed some rebalancing that has occurred in the economy since the economic crisis pointing to growth in the tradeable economy. That rebalancing will be dealt a blow if the Reserve Bank continues to hike the Official Cash Rate (OCR) on Thursday say the New Zealand Manufacturers and Exporters Association (NZMEA).

English noted that “some of the imbalances handicapping New Zealand's economy for the past five or six years are easing” as the tradeable sector is now growing faster than the non-tradeble sector.

“While the turnaround in our growth profile has been largely fuelled by a collapse in the domestic sector rather than any great take-off in the tradeable sector, we do not want to jeopardise any rebalancing that has occurred,” says John Walley, NZMEA Chief Executive.

“The contrast between the RBNZ hiking interest rates here and central banks in the United Kingdom and the United States indicating an extended holding pattern has already seen the New Zealand dollar reach six month highs. Closer to home the RBA’s holding pattern is an indication that they went early – we did the same and should admit it.”

“There has been talk that five percent is a neutral level for the OCR, but a neutral level is really comparative. With our OCR sitting closer to the Australian rate than the rates of the Northern economies it is feeling pretty tight right now.”

“Continuing to hike the OCR despite the weight of evidence against the move will do significant harm to the tradeable economy. If the Reserve Bank is seriously concerned about controlling domestic inflation it needs to look to other macro-prudential tools to do it. It should be apparent by now that killing returns to the tradeable sector does nothing to solve the problem of domestic inflation.”

tags: rbnz, ocr, tradeable sector


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