Last Thursday's release by the ANZ economists of their Business Outlook survey for June was strong across the board. While the headline results are still influenced by post-earthquake boom-time conditions in construction, the reality is that the rest of the economy is doing fine, too. In May, the ANZ team estimated that, combining their Business Outlook readings with their Consumer Confidence readings, the economy was likely to be growing at a 3.7% rate by the end of this year. On these latest June numbers, that estimate is now for 4.4% growth - faster, the ANZ reckons, than we can actually deliver or keep up.
What the New Zealand economy can actually manage over the longer haul is basically a productivity issue: while you can grow an economy by employing more people and by investing in more capital equipment for them to work with, over the longer term it's your productivity - what extra you can achieve with any given set of resources - that determines your living standards. I'm looking forward to tomorrow's day-long symposium at Te Papa, 'Unpicking New Zealand's productivity paradox', which is assembling a bunch of domestic and international experts to look at New Zealand's current and potential productivity performance.
The 'paradox', by the way, if I've got it right, is that any reasonably developed country can readily access best productivity practice and implement it for themselves, but despite this ready access and the strong and clear incentive to exercise it, we don't seem to have done so, or at any rate not on any scale that has mattered overall. Our levels of productivity seem to stay lower than countries whose practices and technologies we should be able to duplicate.