Manufacturers Association Economic Bulletin

23 November 2000

BULLETIN NO. 9/2000

Brief Comments on Statistics Recently Released

Overview
There is increasing commentary in the media that the sharp fall in business confidence was over done and New Zealand is now experiencing reasonable growth. However, from a manufacturing perspective it appears the short term outlook for the sector is still very weak. Some parts of the sector are still experiencing a decline in domestic activity but the prospects for a stronger export led recovery are improving.

Overseas Trade – September 2000
 Total provisional exports increased by 25% in September and by 23% in the September quarter.
 Exports of manufactured products (BMS – excludes meat, dairy and fish products, scoured wool and wood pulp) increased by 35% in September and by 28% in the September quarter.
 Exports of elaborately transformed manufactured products continued to accelerate in the quarter, with an increase of $425 million from the previous quarter. This compares with growth of $366 million in the June quarter and $286 million in the March quarter.
 On an annual basis exports of ETMs increased by $1,293 million, 19% up on the previous year.
 This ETM export growth, however, was well behind the increase in ETM imports, which grew by $3,414 million in the year to September, 17% up on the previous year.
 Import growth has been slowing, but with a $635 million increase in ETM imports in the quarter the gap between exports and imports has not yet closed.

 There has been a slowing in imports of consumer durables and motor vehicles but imports of other consumer goods rose by 7% in the September quarter.

 Imports of capital goods appear to be strong but it is becoming increasingly difficult to differentiate between consumer goods and capital goods. The capital goods category includes items such as computers, video cameras and telephone equipment (including mobile phones). Imports of electronic equipment increased by $619 million over the last 12 months so were a significant contributor to the overall growth of imports.
 Rising oil prices as well as increases in prices for other commodities resulted in 35% growth in imports of manufactured commodities in the year ended September. Iron and steel imports increased by 18% while non-ferrous metal imports increased by 11%.
 Imports of paper and paperboard have increased strongly with growth of 42% in the September quarter and 33% in the year ended September, with annual imports reaching $307 million.
Source: Statistics NZ
Retail Trade – September Quarter
 Nominal retail sales increased by 5.7% in the September quarter but there was significant variation in growth across sectors. Sales by appliance retailers rose by 12.3% in the quarter but motor vehicle retailers experienced a 2.1% fall.
 Higher petrol prices were the major factor contributing to a 3.9% increase in estimated retail prices in the 12 months to September. This was the highest recorded for more than 10 years.
 Appliance retailing prices rose by 0.1% in the September quarter but were still 0.8% down on September 1999. There was stronger growth in prices in the motor vehicle retailing sector but even these were only 2.8% up on September 1999.
 The slowing in nominal retail sales growth and the increase in retail price inflation contributed to a rapid slowing in retail sales volume growth. Volume growth has been slowing since peaking at 6.0% in September 1999 but by September 2000 was down to 1.6%.

 It appears retailers failed to anticipate this slowing in growth with overall nominal stock levels up by 9.3% in the September quarter. Retailers of recreational goods had a 20.5% increase in stocks in September while in the clothing and soft goods sector stocks were up 17.5%. (It has been reported that some clothing and soft goods companies were reclassified from the wholesale to the retail sector, boosting the retail data in the quarter.)
 Department stores and food retailers with stock increases of just 1.2% and 2.3% maintained very tight stock control.
Source: Statistics NZ

Value of Building Work Put in Place – September Quarter
 The total value of building work put in place in the September quarter was 1,785 million, 1.6% down on the September 1999 quarter.
 Residential building activity fell by 2.5% in the quarter while non-residential building activity was down by 0.2%.
 In the residential sector there was a more rapid slow down in the activity on alterations and additions, with a 6.0% fall from September 1999. New dwelling building activity was down 1.8%.
Source: Statistics NZ

Labour Cost Index – Salary and Wage Rates – September Quarter
 Salary and wage rates (including overtime rates) increased by 0.4% in the September quarter, 1.5% up on September 1999.
 The gap between public sector and private sector growth in wage rates continues to narrow. Public sector wage rates rose by 2.0% in the year to September while private sector wage rates increased by 1.4%.
 The survey shows that 5.5% of the labour force did not receive any change in their salary or ordinary time wage rate over the last 12 months.
 The survey, however, does not show changes in overall earnings as one-off payments such as bonuses are not covered by the survey.
 Salary and wage growth in the manufacturing sector remains below the average for the overall economy, with a 1.3% increase from September 1999.
 The fastest wage growth in the manufacturing sector continues to be in the machinery and metal products sector, with an increase of 1.7% in the last 12 months.
Source: Statistics NZ

Quarterly Employment Survey – August 2000
 The number of people employed in August was 3.4% up on August 1999 while the total number of hours worked increased by 4.0%.
 The increase in the number of hours worked and the increase in wage rates boosted total earnings by 5.8% in the quarter.
 Employment growth for males continues to lag behind employment for females with the result that for the last two quarters there were more females employed than males. In August 705,700 males were employed compared with 718,500 females.

 While this is in part due to the higher level of part-time employment for females, their level of full-time employment has been increasing much faster than that of males.
 In the two years from August 1998 to August 2000 male full-time employment fell by 3,800 while female employment grew by 17,200. Over this two year period part-time employment for males increased by 9,300 while female part-time employment increased by 24,200.
 Over the last year there were significant changes in the levels of employment by sector. These ranged from a fall of 11.1% in the electricity, gas and water sector and a fall of 8.5% in forestry and mining to increases of 13.2% in the accommodation, café and restaurant sector and 9.6% in health and community services.
 Manufacturing sector employment fell by 0.1% but male employment in the sector was down 1.0% while female employment was up 1.8%.
Source: Statistics NZ

Quarterly Employment Survey – February 2000
 Statistics New Zealand also released last week detailed manufacturing sector employment data for February 2000.
 The data is very illuminating as to the extent of restructuring which has occurred during the sector over the last 5 years.
 Total manufacturing employment over the period from February 1995 to February 2000 fell by 18, 527, a decline of 7.6%.
 Of the 147 manufacturing sectors, 95 experienced a decline in employment levels over the five year period, employment was unchanged in 3 and increased in 49 sectors. Among the sectors recording employment growth, 16 sectors had employment growth of over 50%.
 The major sectors recording declines in employment were:
Full –time equivalent change 95-00
Number %

Clothing
Motor vehicle manufacturing
Railway equipment manufacturing
and servicing
Newspaper printing or publishing
Electrical equipment manufacturing
- 3,810
- 2,120

- 1,370
- 1,190
- 1,120
- 31%
- 89%

- 65%
- 17%
- 30%

 Sectors with the greatest employment growth included:
Full –time equivalent change 95-00
Number %

Boatbuilding
Wine manufacturing
Meat processing
Food processing (excluding traditional
categories)
Soft drink, cordial and syrup
manufacturing
1,330
1,010
960

800

630
68%
103%
5%

22%

105%

Peter Crawford Phone: 04 496 2813 (wk)
Trade and Economic Analyst 04 389 8945 (hm)

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