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Productivity Statistics: 1978-2007
Embargoed until 10:45am  –  13 March 2008
Commentary

Annual productivity series for the measured sector from 1978–2007 have been released in this publication. The measured sector has been expanded to include the business services industry and the personal and other community services industry from 1996 onwards. In 2004 (the latest year for which current price industry value added data are available), the measured sector covered approximately 73 percent of the economy. It excludes the following industries: government administration and defence, health, education, ownership of owner-occupied dwellings and property services. Refer to the Technical notes of this release for a more detailed definition and explanation of the measured sector.

A set of supplementary tables with productivity series for the former measured sector are also available with this publication. It is intended that these supplementary tables will be available in future publications, both to maintain the previously released time series, and to maintain comparability with Australia, whose official productivity statistics have exactly the same industrial coverage as the former measured sector.

Unless otherwise stated, all references to average movements are annual geometric mean movements relating to the measured sector (including business services, and personal and other community services).

Background

Productivity is a measure of how efficiently inputs are being used within the economy to produce outputs. Productivity is commonly defined as a ratio of a volume measure of output to a volume measure of input. Growth in productivity means that a nation can produce more output from the same amount of input. Productivity growth is an important contributing factor to a nation’s long-term material standard of living.

Productivity measures can be either single factor (that is, relating a measure of output to a single measure of input), or multifactor (that is, relating a measure of output to a bundle of inputs). Labour and capital productivity are single (or partial) factor productivity measures; they show productivity growth in terms of that particular input. Hence, productivity changes shown in these indexes may be due to a change in the mix of total inputs rather than a direct productivity increase from the relevant input. For example, if additional machinery (capital input) is used to assist in production, less labour input may be required to produce the same level of output. This will increase labour productivity, simply because the mix of the inputs has altered. On the other hand, multifactor productivity takes into account substitution between labour and capital inputs, and is therefore not directly affected by a change in the mix of total inputs. The growth accounting sections of this commentary provide a breakdown of the sources of growth in real gross domestic product (GDP) and labour productivity.

Statistics New Zealand’s official productivity statistics comprises series for labour productivity, capital productivity and multifactor productivity (MFP). The MFP series uses the labour and capital input indexes, which are combined and weighted appropriately to create a total inputs series. All input and output indexes measure growth in volumes and have a base year of 1996, with real GDP as the output measure. The development of these official statistics is consistent with Organisation for Economic Co-operation and Development (OECD) guidelines.

The productivity measures are for the years ended March 1978 to 2007. This period reflects the current availability of relevant source data. Statistics NZ has estimated growth cycles in the data to assist users in interpreting the results of the productivity series. There is general consensus that the productivity series are of the most interpretive value when viewed in terms of growth cycles. This is because factors such as capacity utilisation tend to vary from year to year, making interpretation of annual movements difficult. Please note that the turning point of the latest cycle is not finalised because of the provisional nature of data from 2005 onwards, thus some caution is advised when comparing with other cycles. For more information, refer to the Estimating growth cycles section in the Technical notes.

Labour productivity

Graph, Measured Sector Labour and Output Indexes.

Labour productivity is measured as a ratio of output to labour input. In the year ended March 2007, labour productivity increased by 0.5 percent for the measured sector. This was driven by output growth of 1.4 percent and labour input growth of 0.9 percent. The continued strength of the labour market was highlighted by a low unemployment rate of 3.7 percent for the year ended March 2007 (consistent with unemployment for the previous year) and a then-record labour force participation rate of 68.4 percent, up from the previous year's rate of 68.1 percent.

The growth in labour productivity for 2007 is largely attributable to capital deepening (ie an increase of capital input relative to labour input) of 1.1 percent, with multifactor productivity falling 0.6 percent. Refer to the Growth Accounting for Labour Productivity section for more details on these components.

This growth in labour productivity for 2007 is below the average annual growth in labour productivity since 2000. The growth over this latest cycle is lower than any of the previous cycles, however some caution is required in this comparison due to the length of the latest cycle being unfinalised.

The table below presents the average annual growth in labour productivity for the growth cycles identified within the series (see the Technical notes for more information on growth cycles).

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Labour Productivity Average Annual Growth Rates (percent)(1)(2)(3)
Year ended 31 March   
Cycle Output Labour input Labour productivity
 1978–1982 2.1  0.4  1.7
 1982–1985 3.4  2.0    1.4 
 1985–1990 0.7  -2.1   2.9
 1990–1997 3.3 0.8 2.5
 1997–2000  2.9  0.1 2.8
 2000–2007  3.3  2.2  1.1
 1978–2007 2.6  0.6 2.0

(1) The average annual growth rate values do not include the movement for the first year of each cycle, eg the 1978–1982 average annual growth rate does not include the movement for 1978.
(2) Percentage changes are calculated on unrounded index numbers.
(3) Business services, and personal and other community services are included in the measured sector from 1996 onwards.

Lower growth of labour productivity, as shown in recent years, could be explained by several factors. One influence is a change in the skill composition of the employed labour force, due to skill shortages resulting from a tight labour market. The average unemployment rate over the 2000–2007 cycle was 4.5 percent, significantly lower than its average rate in previous cycles. Labour input growth, averaging 2.2 percent annually, is higher than any of the previous cycles.

From 1985–1990, there was a significant fall in the average annual rate for labour input, down 2.1 percent, while the average annual growth of output showed a relatively low increase of 0.7 percent. This led to an average annual increase of 2.9 percent in labour productivity. The fall in labour input reflects the declining employment (and rising unemployment) in the labour market during this cycle. For the year ended March 1990, the unemployment rate was 7.1 percent, compared with an unemployment rate of 4.1 percent in the year ended March 1987. Official unemployment statistics from the Household Labour Force Survey did not exist prior to the March 1986 quarter.

Labour productivity growth remained strong during the 1997–2000 cycle, with an annual rate of 2.8 percent. This was due to solid growth in output (average annual increase of 2.9 percent), and slow growth in labour input (average annual rise of 0.1 percent). The number of people employed in the measured sector was either stagnant or falling throughout the late 1990s.

From 1978–2007, average annual growth in labour productivity was 2.0 percent. This was driven by annual labour input growth of 0.6 percent and 2.6 percent annual growth in output.

Capital productivity

Graph, Measured Sector Capital and Output Indexes.

Capital productivity is measured as a ratio of output to capital input. In the year to March 2007, capital productivity fell 2.1 percent, due to the continued growth in capital input (up 3.6 percent), coupled with weaker output growth (up 1.4 percent). The table below presents the annual average growth in capital productivity for the growth cycles identified within the series.

Capital Productivity Average Annual Growth Rates (percent)(1)(2)(3) 
Year ended 31 March  
Cycle Output Capital input Capital productivity 
 1978–1982 2.1  1.7 0.4
 1982–1985 3.4  6.8 -3.2
 1985–1990 0.7  4.9 -4.0 
 1990–1997 3.3  2.0   1.2
 1997–2000 2.9 2.4  0.5 
 2000–2007 3.3 3.8  -0.5
 1978–2007 2.6 3.4 -0.7

(1) The average annual growth rate values do not include the movement for the first year of each cycle, eg the 1978–1982 average annual growth rate does not include the movement for 1978.
(2) Percentage changes are calculated on unrounded index numbers.
(3) Business services, and personal and other community services are included in the measured sector from 1996 onwards.

In the early 1980s, the strong growth in capital input was largely driven by significant investment in the energy sector on a number of projects collectively known as 'Think Big'. From 1982–1985, capital input grew (averaging 6.8 percent) significantly more than output growth (averaging 3.4 percent), which led to an average annual decrease of 3.2 percent in capital productivity. Strong capital input growth continued on to 1985–1990, which led to the sharpest fall in capital productivity for any of the six cycles, an average annual decrease of 4.0 percent.

From 1990–1997, capital productivity growth peaked, with an average annual growth rate of 1.2 percent. This was due to high output growth, which averaged 3.3 percent annually, while capital input was averaging 2.0 percent on an annual basis. Capital productivity continued to grow, but at a slower rate, in the following period, averaging 0.5 percent annually from 1997–2000.

The average annual growth in capital productivity fell 0.5 percent from 2000–2007. The annual capital input growth was 3.8 percent, whereas the annual growth in output was 3.3 percent. The increase in capital input was due to strong business investment in fixed assets in recent years. This was particularly evident in the construction industry, where that investment supported the strong economic activity.

From 1978–2007, capital productivity fell 0.7 percent on an annual basis. This was driven by strong annual capital input growth of 3.4 percent and 2.6 percent annual growth in output.

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Multifactor productivity

Graph, Measured Sector Input, Output and Productivity Indexes.

Multifactor productivity (MFP) is measured as a ratio of output to total inputs. It can also be defined as growth that cannot be attributed to capital or labour, such as technological change or improvements in knowledge, methods and processes. In the year to March 2007, MFP fell 0.6 percent, due to total inputs increasing (up 2.1 percent) more than the growth in output (up 1.4 percent).

The table below presents the annual average growth in multifactor productivity within the growth cycles identified for the series.

Multifactor Productivity Average Annual Growth Rates (percent)(1)(2)(3) 
Year ended 31 March
 Cycle Output Total inputs Multifactor productivity
 1978–1982 2.1 0.9 1.2
 1982–1985 3.4 3.9 -0.5
 1985–1990 0.7 0.5 0.2
 1990–1997 3.3 1.2 2.0
 1997–2000 2.9 1.0 1.9
 2000–2007 3.3 2.9 0.4
 1978–2007 2.6 1.7 0.9

(1) The average annual growth rate values do not include the movement for the first year of each cycle, eg the 1978–1982 average annual growth rate does not include the movement for 1978.
(2) Percentage changes are calculated on unrounded index numbers.
(3) Business services, and personal and other community services are included in the measured sector from 1996 onwards.

The MFP annual growth rates showed increases for five of the six cycles, with a range of 0.2 to 2.0 percent. The only cycle that showed a fall in MFP was between 1982 and 1985 (an average annual fall of 0.5 percent), due to total inputs (up 3.9 percent) increasing at a greater rate than output (up 3.4 percent) on an annual basis. Capital input was the main driver for the growth in the total inputs, with average annual growth of 6.8 percent during this cycle.

From 2000–2007, MFP has grown, but at a slower rate than two previous cycles, with an increase of 0.4 percent per annum. Output rose 3.3 percent on an average annual basis, while total inputs rose 2.9 percent. The dominant contributor to the growth in total inputs was capital input, which rose 3.8 percent on an average annual basis. Increasing investment in fixed assets and strong business activity in construction drove capital input to increase during the cycle.

The average annual increase of 0.9 percent in MFP from 1978–2007 was due to output growth (up 2.6 percent annually) rising more than input growth (up 1.7 percent annually).

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Growth accounting for real GDP

Growth accounting examines how much of the economy’s growth in output can be explained by the growth of combined inputs. In particular, growth in output (real GDP) can arise from three different sources: an increase in labour input, an increase in capital input, or an increase in MFP. The graph below presents growth in output between 1978 and 2007 for the growth cycles identified in the series.

Graph, Contribution to Measured Sector Real GDP Growth.

The table below presents the annual average growth in output and its contributing factors for the growth cycles identified within the series.

Contribution to Measured Sector Real GDP Growth (percent)
Average annual growth rates (1)(2)(3)
Year ended 31 March  

 Cycle Real GDP  Capital input Labour input Multifactor productivity
 1978–1982 2.1  0.7 0.3 1.2 
 1982–1985 3.4 2.7 1.2 -0.5
 1985–1990 0.7 1.9 -1.4 0.2
 1990–1997 3.3  0.8  0.5 2.0 
 1997–2000 2.9  0.9 0.1  1.9
 2000–2007 3.3 1.6  1.2 0.4
 1978–2007  2.6 1.4 0.3 0.9

(1) The average annual growth rate values do not include the movement for the first year of each cycle, eg the 1978–1982 average annual growth rate does not include the movement for 1978.
(2) Percentage changes are calculated on unrounded index numbers.
(3) Business services, and personal and other community services are included in the measured sector from 1996 onwards.

In 2007, growth in output was 1.4 percent. This was driven by capital input (contributing 1.6 percent to the growth in output), and to a lesser extent by labour input (contributing 0.5 percent). Multifactor productivity contributed negatively to output, falling 0.6 percent.

Over the entire 1978–2007 cycle, output growth averaged 2.6 percent. Capital input was the largest contributor, averaging 1.4 percent on an annual basis. Labour input contributed 0.3 percent to this rise in output and MFP contributed 0.9 percent.

From 1978–1982, growth in output was positive, averaging 2.1 percent on an annual basis. This was driven by positive growth from all three contributors: capital input contributed 0.7 percent, labour input contributed 0.3 percent and MFP contributed 1.2 percent, on an average annual basis.

From 1982–1985, capital input was relatively strong, contributing 2.7 percent average annual growth to GDP. This, along with positive growth in labour input (averaging 1.2 percent on an annual basis) contributed to strong growth in GDP, averaging 3.4 percent on an annual basis. Output growth in 1985 was particularly high, at 5.8 percent. The positive growth in both capital and labour input from 1982–1985 was large enough to offset the negative contribution from MFP (which contributed -0.5 percent on average to annual GDP).

From 1985–1990, a decline in labour input contributed -1.4 percent annual growth to GDP. This negative contribution was an offsetting factor to positive capital input (which contributed 1.9 percent on average to annual GDP), and improvement in MFP (which contributed 0.2 percent to average annual GDP growth). Overall, GDP growth was low, averaging 0.7 percent annually over this cycle.

From 1990–1997, there was a marked improvement in GDP growth, averaging 3.3 percent on an annual basis. This reflected positive average annual growth from all three factors: capital input (0.8 percent), MFP (2.0 percent) and labour input (0.5 percent).

From 1997–2000, positive growth in capital input and strong growth in MFP, averaging 0.9 percent and 1.9 percent, respectively, on an annual basis, contributed to positive GDP growth (up 2.9 percent on an average annual basis) during this cycle. Output fell in the March 1999 year (down 0.2 percent), a combined result from the Asian economic crisis and two successive droughts that significantly reduced production of primary goods. However, the economic recovery following this was the main driver for the strong average growth from 1997–2000. In the year ended March 2000, output increased by 6.8 percent. There were three predominant factors contributing to the strong output growth in 2000. Firstly, a surge in export volumes (due to the combined effect of the low New Zealand dollar and growing demand from overseas) resulted in growth in prominent export-oriented industries, such as primary food manufacturing, forestry and agriculture. Secondly, sustained consumer spending was recorded throughout the year. Thirdly, business investment on fixed assets was up markedly, rising 7.4 percent in the March 2000 year.

For the latest cycle, 2000–2007, average annual growth in GDP was 3.3 percent. This was driven by growth in capital and labour inputs, averaging 1.6 and 1.2 percent respectively on an annual basis. Multifactor productivity contributed 0.4 percent to the increase in growth. Growth in output was due to a combination of factors. High world prices for export commodities, a relatively low exchange rate for much of the cycle further boosting export growth, a booming residential construction sector and a strong labour market were key drivers in strong output growth during this cycle.

Capital-labour ratio

 Graph, Measured Sector Factor Inputs and Capital to Labour Ratio Indexes.

The capital-labour ratio is simply calculated as the capital input index divided by the labour input index. An increase in the ratio is referred to as capital deepening, while a decrease is termed capital shallowing. In the year to March 2007, the capital-labour ratio rose 2.7 percent, compared with 2.6 percent in the year to March 2006.

The table below presents the average annual growth in the capital-labour ratio and capital and labour inputs for the growth cycles identified within the series.

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Capital-Labour Ratio Average Annual Growth Rates (percent)(1)(2)(3)
Year ended 31 March  
 Cycle Capital input Labour input Capital-labour ratio
 1978–1982 1.7 0.4 1.3
 1982–1985 6.8 2.0  4.7
 1985–1990 4.9 -2.1  7.2
 1990–1997 2.0 0.8 1.2
 1997–2000 2.4 0.1 2.3
 2000–2007 3.8 2.2 1.6
 1978–2007 3.4 0.6  2.8

(1) The average annual growth rate values do not include the movement for the first year of each cycle, eg the 1978–1982 average annual growth rate does not include the movement for 1978.

(2) Percentage changes are calculated on unrounded index numbers.

(3) Business services, and personal and other community services are included in the measured sector from 1996 onwards

The New Zealand economy has experienced great capital deepening during the last 29 years. The average annual growth in the capital-labour ratio was 2.8 percent from 1978–2007, due to 3.4 percent average annual growth in capital input, compared with 0.6 percent average annual growth in labour input.

From 1985–1990, the average annual growth rate for the capital-labour ratio recorded its highest increase of 7.2 percent. This was due to a decrease in the average annual rate in labour input (down 2.1 percent), while capital input increased 4.9 percent on an average annual basis. As previously mentioned, the labour market was characterised by declining employment (and rising unemployment) during this cycle, which contributed to the fall in labour input.

From 1990 onwards, capital input has continued to increase at a higher rate than labour input. This contributed to the capital-labour ratio continuing to increase, but at a lower rate than the 1985–1990 period.

Growth accounting for labour productivity

As with growth in output, growth in labour productivity can be broken down into components. In particular, a change in labour productivity can come from two possible sources: a change in the weighted capital-labour ratio (that is, capital deepening or capital shallowing) and a change in MFP. The graph below presents the contributions to labour productivity growth between 1978 and 2007 for the growth cycles identified in the series.

In 2007, labour productivity grew by 0.5 percent. This was driven by capital deepening of 1.1 percent and a fall in multifactor productivity of 0.6 percent.

 Graph, Contribution to Measured Sector Labour Productivity Growth.

 The table below presents the annual average growth in labour productivity and its contributing factors for the growth cycles identified for the series.

Contribution to Measured Sector Labour Productivity Growth 
Average annual growth rates (percent)(1)(2)(3)
Year ended 31 March
Cycle Labour productivity Contribution of capital deepening(4)

Multifactor productivity

1978–1982 1.7 0.5 1.2
1982–1985 1.4 1.8 -0.5
1985–1990 2.9 2.7 0.2
1990–1997 2.5 0.4 2.0
1997–2000 2.8 0.8 1.9
2000–2007 1.1 0.7 0.4
1978–2007 2.0 1.1 0.9

(1) The average annual growth rate values do not include the movement for the first year of each cycle, eg the 1978–1982 average annual growth rate does not include the movement for 1978.
(2) Percentage changes are calculated on unrounded index numbers.
(3) Business services, and personal and other services are included in the measured sector from 1996 onwards.
(4) Contribution of capital deepening is equal to the growth rate in the capital-labour ratio weighted by capital's share of total income.

Over the entire 1978–2007 period, the average annual contribution to labour productivity growth from capital deepening was 1.1 percent. The average contribution of MFP growth was 0.9 percent on an annual basis. Labour productivity growth averaged 2.0 percent annually.

In the 1980s, capital deepening was the main driver of growth in labour productivity. From 1982–1985, the contribution of capital deepening to labour productivity growth was 1.8 percent. The decline in labour productivity growth (down from 1.7 percent in the previous cycle to 1.4 percent) was due to an average annual decrease of 0.4 percent. From 1985–1990, the contribution of capital deepening to the strong labour productivity growth (which rose 2.9 percent on an average annual basis) averaged 2.7 percent on an annual basis. During the late 1980s, unemployment increased rapidly, rising from 4.0 percent in the March 1987 quarter to a high of 10.9 percent in the September 1991 quarter. This led to declining labour input, and, coupled with strong capital input growth, resulted in significant capital deepening over this cycle. Multifactor productivity contributed an average of 0.2 percent to annual labour productivity growth.

In the 1990s, a different picture emerges, as the main contributor to growth in labour productivity was MFP. From 1990–1997, labour productivity rose 2.5 percent on an average annual basis, reflecting on average contributions of 2.0 percent by MFP and 0.4 percent from capital deepening. The largest growth in labour productivity was from 1997–2000, when it averaged 2.8 percent annually. Multifactor productivity contributed 1.9 percent to labour productivity on an average annual basis during this cycle. Capital deepening contributed an average of 0.8 percent to annual labour productivity.

Labour productivity over the 2000–2007 cycle was relatively low, averaging 1.1 percent on an annual basis. Subdued capital deepening and average MFP growth (up 0.7 and 0.4 percent, respectively, on an average annual basis) contributed to this. In the latter half of this cycle, capital deepening has grown at a faster rate, whilst MFP growth has slowed.

Expansion to the measured sector

As stated above, business services and personal and other community services have been added to the measured sector, from 1996 onwards. The business services industry is very diverse and includes organisations engaged in providing professional, scientific and technical services, architecture, engineering, computer systems design, law, accountancy, advertising, market research, management, consultancy, veterinary science and professional photography. The personal and other community services industry is also diverse, and includes personal and household services such as laundry and dry cleaning, photographic and film processing, funeral directors, gardening services, hairdressers and beauty salons. Also included are private households employing staff, religious organisations, business and professional organisations, labour associations, waste disposal services, and sewerage and drainage services.

The table below summarises the average annual growth in productivity series within the growth cycles identified before and after the inclusion of business services and personal and other community services.

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Comparison table: Former and Expanded Measured Sector
Productivity series and output measure (GDP)
Average annual growth rates (percent) (1)(2)(3)
Labour productivity Capital productivity Multifactor productivity Output measure (GDP)
Cycle Former Expanded Former Expanded Former Expanded Former Expanded
1978–1982 1.7 1.7 0.4 0.4 1.2 1.2 2.1 2.1
1982–1985 1.4 1.4 -3.2 -3.2 -0.5 -0.5 3.4 3.4
1985–1990 2.9 2.9 -4.0 -4.0 0.2 0.2 0.7 0.7
1990–1997 2.6 2.5 1.2 1.2 2.1 2.0 3.2 3.3
1997–2000 3.4 2.8 0.6 0.5 2.3 1.9 2.6 2.9
2000–2007 1.2 1.1 -0.4 -0.5 0.5 0.4 3.1 3.3
1978–2007 2.1 2.0 -0.7 -0.7 1.0 0.9 2.5 2.6

(1) The average annual growth rate values do not include the movement for the first year of each cycle, eg the 1978–1982 average annual growth rate does not include the movement for 1978.
(2) Percentage changes are calculated on unrounded index numbers.
(3) Business services, and personal and other community services are included in the measured sector from 1996 onwards.

The inclusion of business services, and personal and other community services into the measured sector has had a downward impact on productivity growth. This is especially evident in the 1997–2000 period, and is despite an upward impact on output during that time. Labour productivity dropped from averaging 3.4 percent annually, to 2.8 percent, and MFP also took a downward hit, from 2.3 percent to 1.9 percent annually. The impact on labour productivity during this period was the main contributor to the 1978–2007 annual average growth falling from 2.1 percent to 2.0 percent.

The table below presents the average annual growth in the input series and the capital-labour ratio before and after the inclusion of business services and personal and other community services.

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 Comparison table: Former and Expanded Measured Sector
Input series and capital-labour ratio
Average annual growth rates (percent) (1)(2)(3)
Labour input Capital input Total inputs Capital-labour ratio
Measured sector Former Expanded Former Expanded Former Expanded Former Expanded
1978–1982 0.4 0.4 1.7 1.7 0.9 0.9 1.3 1.3
1982–1985 2.0 2.0 6.8 6.8 3.9 3.9 4.7 4.7
1985–1990 -2.1 -2.1 4.9 4.9 0.5 0.5 7.2 7.2
1990–1997 0.6 0.8  1.9 2.0 1.1 1.2 1.3 1.2
1997–2000 -0.8 0.1 2.0 2.4 0.3 1.0 2.8 2.3
2000–2007 1.9 2.2 3.5 3.8 2.6 2.9 1.6 1.6
1978–2007 0.4 0.6 3.3 3.4 1.5 1.7 2.9 2.8

(1) The average annual growth rate values do not include the movement for the first year of each cycle, eg the 1978–1982 average annual growth rate does not include the movement for 1978.

(2) Percentage changes are calculated on unrounded index numbers.

(3) Business services, and personal and other community services are included in the measured sector from 1996 onwards.

The main story in the expansion of the measured sector lies in the differences in the input growth rates. This is most evident in the labour input series, where the growth rate across the 1997–2000 period rose from -0.8 percent in the former measured sector to 0.1 percent, annually. There were also positive impacts on labour input growth rates in the adjacent periods, resulting in the overall labour input growth rate rising from 0.4 percent to 0.6 percent annually from 1978–2007. In fact, from 1996–2007, labour input grew by 19.4 percent in the expanded measured sector, compared with only 12.3 percent in the former measured sector.

Capital input growth rates have also been boosted upwards with the introduction of the new industries into the measured sector. Once again, the main impact comes during the 1997–2000 cycle, with annual average growth rates rising from 2.0 percent to 2.4 percent. Again, the adjacent periods have also experienced smaller upward changes to capital input growth.

The result of the labour input index being boosted more than the capital input index is a fall in the capital-labour ratio growth rate. This is the case in the 1997–2000 period, and to a lesser extent in the 1990–1997 period. Over the 1978–2007 period, the capital-labour ratio growth rate was revised downwards from 2.9 percent to 2.8 percent annually.

From a growth accounting perspective, the fall in labour productivity growth is therefore due to both a slower rate of capital deepening, and a fall in MFP growth (all relative to the former measured sector). The upward impact on output growth is driven by a rise in labour input, and to a lesser extent by a rise in capital input, partly offset by a fall in MFP (all relative to the former measured sector).

Revisions

Because this is the first-time release of an expanded measured sector, revisions are not applicable for those series. However, the expanded measured sector does incorporate the updated information and methodology referred to below.

As noted above, series for the former measured sector are included in a set of supplementary tables. These former measured sector series contain regular revisions arising from:

  • revised constant price GDP data in the March years 2005 and 2006, feeding into the output series
  • revised current and constant price productive capital stock data for selected assets and industries for March years 2005 and 2006, into the capital input series
  • revisions to Linked Employer-Employee Data (LEED) for the labour volume series of employee counts from 2000 onwards.

The former measured sector series also contains revisions resulting from improved methodology. These are:

  • minor improvements in the measurement of working proprietors from 2000 onwards
  • improvement in the labour volume measurement in the forestry and logging industry prior to 1990.

While there have been minor revisions to some annual movements, the underlying trend of the productivity series has remained unchanged.

For technical information contact:
Brendan Mai or Thomas McNaughton
Wellington 04 931 4600
Email: info@stats.govt.nz.

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