Manufacturers in the north are switching sales from exporting to the domestic market, the latest Survey of Business
Conditions from the Employers & Manufacturers Association (Northern) reveals.
"Export sales growth fell back further in April after the sudden slump in February and March, but turnover on the
domestic market made up slightly more than the difference," said Bruce Goldsworthy, EMA's Director of Manufacturing.
"Total sales were up just one per cent for April compared to the same month a year earlier.
"No doubt the exchange rate is making business tougher for imports with New Zealand made competing locally with more
success now.
"Some of our indicators show firms overall expect business to improve with others reinforcing the trend of the last few
months for very modest gains. The picture is still mixed though turning down.
"A spot of good news is that a net increase of nine per cent of respondents are looking to take on more staff.
"But the high levels last month of those looking to invest in new equipment and training has fallen back dramatically -
its the lowest for several months, apparently reflecting a once off round of decision making.
"Only a net five per cent think profitability will improve which, if it continues, will affect next year's tax take.
"With capacity utilisation falling further, and competition in the market as big a business concern as ever, large price
increases and price inflation are dead in the water.
"Of the 19 per cent of respondents expecting to raise prices, virtually all are said to be as a result of raw
material/component costs (71 per cent) which is an exchange rate factor, and from wage settlements (24 per cent).
"Some may see the outlook overall as a 'steady as she goes' scenario, but the lack of sustained growth is beginning to
become a worry. No signs are emerging of solid business growth to come.
"The economy in the north is just stumbling along."
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