Comments

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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3/6/10

RBNZ must wait until September, at least


Print-friendly 5 comment(s) Posted in: In the media

The Reserve Bank must resist the urge to hike the Official Cash Rate (OCR) until at least September say the New Zealand Manufacturers and Exporters Association (NZMEA). A rate rise now would pose significant risks to the tradeable economy which is already suffering through the lack of profitability caused by an overvalued currency.

NZMEA Chief Executive John Walley says, “The argument for an OCR hike just doesn’t stack up. Export sales, business investment, job numbers and retail sales figures are weighing against an OCR rise. If the OCR is increased it could further threaten any future export recovery.”

“Comments from BERL back up results from our own survey, finding that the March quarter improvement in unemployment numbers masked the decline in jobs in our productive industries. Jobs in agriculture, forestry and fishing are down by 1,400, those in manufacturing are down 8,000, and construction employment has dropped by 5,700 from March last year. These industries are the real drivers of the economy.”

“If the OCR is raised prematurely we are likely to end up in the same destructive cycle we experienced prior to the economic crisis of an overvalued exchange rate stifling our traded sector and fuelling unsustainable growth in the domestic sector,” says Mr Walley. “Central Banks in Europe and North America have shown no inclination to move up their official interest rates and our Reserve Bank should take its cue from them.”

“While the recovery remains fragile and significant international risks remain any rise in the OCR will do far more harm than good, and any signal about lower for longer will be of significant assistance to the real economy.”
 



tags: reserve bank, ocr, unemployment, currency

comments

5 Comment(s)



Eric Crampton - 03 June 2010 at 11:39 AM
Out of curiosity, is there a single occasion in the last decade in which NZMEA has called for RBNZ to increase interest rates?
John Walley - 03 June 2010 at 12:35 PM
Hi Eric

Look for the post that will go up in a moment or two.
John Walley - 03 June 2010 at 12:36 PM
Also have a look at the logic in the old release.
Eric Crampton - 03 June 2010 at 13:54 PM
Aha, thanks! We'll disagree about the relative merits of inflation targeting overall, but very glad to see that call in '07 and especially that the hikes were needed late '05.
John Walley - 06 June 2010 at 21:36 PM
Hi Eric – no issue on inflation targeting, provided (a) it hits the part of the economy causing inflation (non-trade exposed) (b) does not have a kicker on the exchange rate that damages the trade exposed sector immediately and overtime the prospects for us all.

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