In the advanced economies, the decline in labour productivity growth is due to a slowdown in the growth of investment per hour worked (reduced capital deepening) and lower total factor productivity growth (TFP).
1 In New Zealand, the slowdown in labour productivity growth is mainly due to the reduced contribution from TFP – the average contribution of TFP to potential output growth in the current cycle has been less than half that of the previous two cycles (figure 3 – TFP is a measure of how efficiently and intensively other factors of production are being utilised).