Strong economic recovery, says Mr Muldoon

Press, Volume CXII, Issue 33093, 7 December 1972, Page 2

Strong economic recovery, says Mr Muldoon

(New Zealand Press Association)

WELLINGTON, December 6. There had been a strong recovery in the rate of economic activity, said the Minister of Finance (Mr Muldoon) today in a review of the economy.

The recovery was evident in the retail trade, building permits for new houses and flats, farming and other income, and a slowing in the rate of inflation, he said.

These and other relevant factors were moving in the directions planned by the National Government which could fairly claim to have left the economy in a better and more promising shape than any other outgoing administration, he said. The recovery was led by a surge in consumer demand which began in the quarter ended June 30 and was strengthened in the September quarter. The volume of retail sales in the September

quarter was 6.4 per cent higher than in the first quarter of this year. This rise was the largest for 12 years, said Mr Muldoon. A continued high level of demand must eventually require increased industrial output. Reports suggested that orders received by manufacturers were improving, and that industrial output was expanding more rapidly. The housing industry was already experiencing strong growth. Other types of building were at a high level of activity in Wellington, increasing in Auckland and Christchurch, but still fairly quiet elsewhere. Farm incomes had increased fairly rapidly. This, with the very large increase in total expenditure on social security benefits in the September quarter and the payment of the October cost-of-living order, should be more than sufficient to maintain a strong growth in real disposable incomes. Liquidity “The economy is now very liquid,” said Mr Muldoon. “The money supply and liquid assets of the public have grown very strongly in the last 12 months, and all the evidence suggests this position will be maintained. As well, the external accounts of the country have continued to strengthen.” He said recent evidence suggested that private consumption expanded at an annual rate of almost 12 per cent during the quarters ended June and September. The volume of retail trade for the September quarter was 3.9 per cent above that for the June quarter, which had been 2.4 per cent above that of the March quarter. The increase in the March quarter was 1.2 per cent above that for the preceding quarter. New-car registrations for the September quarter were 19.4 per cent higher than in the corresponding quarter of 1971. and, on a comparable basis, registrations for the June quarter were up 16.7 per cent.

During the September i ; quarter, 32.8 per cent more I second-hand cars changed t ; hands than in the September 1 ■ quarter of 1971. I The volume of petrol sales i ‘ during the September quarter i ■ was more than 5 per cent up i I on the corresponding quarter 1 of 1971. Private fixed investment , had grown during the Sept tember quarter, and a . further rise could be exs pected in the present quarter, > said Mr Muldoon. During the quarter ended f September, permits issued for , new houses increased by 28.9 1 per cent, compared with the r same quarter last year, and those for flats increased by . 43.8 per cent. The over-all , increase was 34.2 per cent in > permits issued and, in [ dwellings completed, 14.2 per . cent. There was evidence of a . higher level of farm invest- > ment. Reports from meri chants and stock firms indi- . cated that in recent months sales of capital equipment to fanners had markedly increased. In addition, the volume of fertiliser sales for r the period, July to October, ■ was 38.6 per cent up on the I corresponding months of > 1971, said Mr Muldoon. [ The rate of growth of bank I deposits had continued to . —

rise spectacularly, mainly because of the record current-account balance on overseas exchange transactions. Average deposits in October were 32.4 per cent ($337m) higher than a year ago, he added.