Some of New Zealand’s industry spokespeople are concerned about the effect of interest rate rises and the value of the country’s dollar, following yesterday’s Reserve Bank cash rate increase.
Fairfax NZ reports that the rate rise, the first since July 2010, is expected by economists to be followed by further rises to attempt to keep a lid on the country’s inflation.
Higher rates, by drawing increased foreign investment, could lead to an increase in the value of the country’s dollar, which crept up following yesterday’s 0.25 per cent increase. The interest rate is currently at 2.75 per cent.
Kim Campbell, CEO of the Employers and Manufacturers Association, said that jobs were already under strain, and a higher dollar would be negative.
“You keep the dollar up it means our imported goods are cheaper, which is good, but you've got a whole chunk of the export economy which is uncompetitive,” he told Fairfax NZ.
Meanwhile, the BNZ-Business NZ PMI, released today, shows the country’s manufacturing sector continuing its robust growth, with good news for employment in particular.
As the New Zealand Herald and others
report, the results indicated NZ’s manufacturing industry achieved its 18th
straight month of growth.
The result of 56.2 for February was well above a score of 50, separating expansion from contraction.
"The last six months of manufacturing expansion have remained at the 56-point value, which represents a very solid level of activity," explained Business NZ’s executive director for manufacturing, Catherine Beard.
Senior economist with Business NZ, Craig Ebert was strongly positive when commenting on employment data from the survey.
“This is evidence that the economic upswing is gaining momentum, spreading across industries and fully radiating into the labour market,” he said in a statement.