Forward Towards Spring

28 August 2006
IMMEDIATE RELEASE

Forward Towards Spring

The latest Canterbury Manufacturers’ Association (CMA) Survey of Manufacturers completed during August 2006, shows total sales in July 2006 increased over 0.37% (export sales down 12% and domestic sales increased 18%) on July 2005.

The CMA survey sample this month reported NZ$613m in annualised sales, with an export content of 52%.

Net confidence returned -14 down a little from -13 last month.

The current performance index (a combination of profitability and cash flow) is at 96 up from 94 last month, the change index (capacity utilisation, staff levels, orders and inventories) remained at 97, the forecast index (investment, sales, profitability and staff) dropped to 97 from 99 in June 06. Anything less than 100 indicates a contraction.

Constraints focused on markets (85%) and capital (8%).

Staff numbers for July decreased by 12%, in comparison with a similar drop for the previous month and a trend that has been in place now since July 05.

“This survey shows a little aggregate growth in the manufacturing sector during July compared to July last year”, says Chief Executive John Walley, “but some companies report significant falls compensated by other respondents so the data holds both positives and negatives”.

“Some members remain positive about business conditions generally, some report seasonal variations – wet cold winter – having an impact. However, there is some optimism with the warmer months ahead”.

“The exchange rate remains a double edged sword for the sector. The sentiment expressed by respondents is that they are happy with the Kiwi dollar being traded in the range of .60 to .64 to the US dollar.”

“The price of oil and rising transportation costs are still major concerns as is the cost of freight out of Canterbury. There are indications that freight volumes are falling and some respondents expressed concerns such as Air New Zealand withdrawing from some longstanding international sectors. Effective connections to the rest of the world are vital to exporters so reduced airfreight, roll on roll off ship availability only in Auckland and spiralling freight costs are an ongoing worry.”

“Members who operate early in supply chains indicate a significant amount of activity in the development and introduction of new product and this activity is an early indicator of growth to come.”

“Significant price pressures are being reported with many materials on “short quote” or “price on order” conditions. This indicates considerable upward price pressure”.

“The concern around skilled staff is receding. There are pockets of difficulty with very specific skills but generally the pressure across the sector is lower. Plant investment in some areas is increasing as technology becomes more adaptable at filling the people gaps.”

“Overall the view seems to be that whilst things are not getting a lot better they are not getting worse, and maybe given the severity of this winter, the spring will see things improve.”

ENDS

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