BUSINESS ACTIVITY

Press, Volume CI, Issue 29984, 20 November 1962, Page 19

BUSINESS ACTIVITY

Tempo Too High?

"Although more restrained than during 1961. business activity in New Zealand continues at a tempo higher than seems justified by export returns, seasonal conditions, r prospects for the months ahead.” says the Bank of New South Wales in its latest "Review.”

“The volume of community spending has been sustained by the cash deficit in the Government’s financial operations in New Zealand and by further distributions from the overdrawn dairy industry reserve fund. The Budget provisions and the general wage increase of 2J per cent, announced in July is giving further impetus to business confidence.

“The current scale of business activity is taking place against a background of import restrictions which limit non-govemment imports to a maximum of £2som. "The balance of overseas payments depends on sustained borrowing overseas. New Zealand's credit stands high in overseas financial centres, and an Internationa) Bank mission has reported New Zealand as creditworthy, presumably indicating that applications to assist with suitable development projects would be favourably considered. While this borrowing helps sustain the rate of development in New Zealand, it serves only to make more urgent the need to augment export earnings,” says the “Review.” Export Earnings "Wool sold readily throughout the 1961-62 auction season, but at prices slightly lower than previous years. The average return was 39.18 d per lb greasy, compared with the previous season's average of 40.34 d. At the opening sales of the current season, prices for crossbred wool were slightly weaker than a year ago. Lamb prices in London moved us sharply during the middle of the year and were showing quite satisfactory returns to exporters. “More recently, however, prices for New Zealand lamb have receded seasonally in the face of heavier English killings, but are still in the vicinity of 4d per lb higher than a year ago. “Since the reimposition of quota restrictions in the British market. New Zealand butter has improved to the almost profitable level of £305 per ton. Cheese prices in London have been unchanged at £231 per ton for more than two years. But with wool output only slightly higher than last year and meat and dairy output likely to show a fall because of the prolonged drought last summer, export income for the fun year may be little higher than in 1961. “Internally there is still some evidence of excess demand and the upward trend of prices continues. The extraordinary pressure on the labour market which has long been a feature of the New Zealand scene, however, has i been easing slightly," the “Re|view” says.