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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Stay off the brakes

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The Reserve Bank must avoid doing further damage to the economic recovery with another premature Official Cash Rate (OCR) hike say the New Zealand Manufacturers and Exporters Association (NZMEA). Below forecast Cost Price Inflation (CPI) and lower than expected economic growth simply do not warrant another interest rate rise at this point.

The Reserve Bank based last month’s decision on a reading of economic conditions that has been shown to be optimistic. Demand, commodity prices and employment point to, at best, a weak and unbalanced recovery. The NZIER’s Survey of Business Conditions suggests that confidence has turned back around and our own survey reported a small expansion in jobs and confidence on 2009, but nothing to indicate a strong recovery. Currency and commodity price volatility, lower growth than expected, weak house sales and supermarket spending slipping for the first time ever in May; all these factors point to an unstable recovery.

NZMEA Chief Executive John Walley says, “None of these indicators highlight an inflation problem. A dip back into recession in Europe or stagnation in China could see commodity prices fall further and very quickly. The risks posed today by these potential shocks far outweigh any potential inflationary pressures a year or so down the track.”

“The latest CPI statistics show that non-tradeable inflation is again driving the CPI numbers while tradeable inflation was negative. Increasing the OCR has little impact on non-tradeable inflation so it is unlikely to fix the problem,” says Mr Walley. “Further efforts by the RBNZ on prudential supervision to restrict banks access to offshore funds, rather than another damaging cycle of rate hikes and currency appreciation, would better target domestic inflation pressures.”

“Generally the upwards pressure on the New Zealand dollar since the last OCR announcement damages our economic recovery and any economic rebalancing.”

“We have said for some time that September should have been the earliest point to consider any moves in the OCR. At this point even September seems too early.”

tags: ocr, reserve bank, cpi


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