20 September 2012

Jobless growth

While GDP growth of 0.6 percent in the three months to June is encouraging, unemployment rose in the same quarter, with few prospects for an improved jobs outlook. “We are seeing GDP growth at a modest rate,” says CTU economist, Bill Rosenberg, “but where are the jobs?”

“There are now clear signs that the Christchurch rebuild is getting underway, particularly in housing, but job growth just isn’t following. Today’s ANZ job advertisements survey also released today confirms the picture, saying the unemployment rate will hover around 7.0 percent in the second half of 2012. That would mean 167,000 people out of work. A much more active approach to job creation is needed.”

Household spending is also very subdued, rising only 0.2 percent in the quarter. “This is further evidence that many families, particularly those on lower incomes, are struggling to make ends meet.”

The GDP result also showed falling exports in the quarter, emphasising the need for the government to be finding ways to manage down the high New Zealand dollar to help exporters.

“Today the government is issuing a new Policy Targets Agreement for the new governor of the Reserve Bank. It should be instructing him to be much more active in managing the exchange rate to ensure it does not strangle many exporters as it is doing now. More active use of existing and new macro-prudential policy tools and managing short term capital flows are essential parts of that. The Agreement should also instruct the governor to be considering the level of unemployment”, Rosenberg says.

ENDS

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