4 December 2007
Selling better for now, but concerned for the long term
The latest Canterbury Manufacturers’ Association (CMA) Survey of Business Conditions, completed during November 2007,
shows total sales in October 2007 increased 8.09% (export sales dropped by 6.2% with domestic sales increasing 22.89%)
on October 2006.
The CMA survey sample this month covered NZ$418m in annualised sales, with an export content of 44%.
Net confidence came out at zero, down from the 8 reported last month.
The current performance index (a combination of profitability and cash flow) is at 97, down from the previous month’s
98, the change index (capacity utilisation, staff levels, orders and inventories) increased to 104 from the previous
months 101, and the forecast index (investment, sales, profitability and staff) is at 103 up on the previous month’s
result of 101. Anything less than 100 indicates a contraction.
Constraints reported 17% production, 25% staff and markets 58%.
Staff numbers for September increased by just over 6.8%.
“This latest survey, and the sentiments expressed around it, say that although manufacturers report short term gains,
there is still concern regarding longer term pain within the sector”, says CMA Chief Executive John Walley.
“Confidence for October slipped on September’s result, yet while domestic sales increased and export sales fell, the
overall trend in sales, rather than one months result, seems to be driving sentiment. Manufacturers are reporting that
they are busy at present and that they are looking ahead towards the summer months, however, serious long term worries
remain”.
“The strong NZD/USD cross rate continues to be a major concern for exporters, especially the impact it is having on
their customer base. Respondents are busy at present but order books are not strong with some surviving on work already
in the system, or the backlog of work that has built up over the past couple of months. Tough times ahead are
anticipated as holes in demand appear”.
“New Zealand companies are not just losing orders and customers to China but also management and workplace skills as
well. Even as more questions are being asked regarding the quality and safety standards of so many Chinese made
products, more New Zealand companies and personnel are committing themselves to China and other low-cost sources”.
“Overall, this is a survey that reflects the uncertainty facing our manufacturers and exporters at present. There has
been some consolidation and minor improvements in trading conditions in recent months. The view within the sector is
that the cycle might be turning, not only for manufacturers, but also the economy as a whole. The ‘China price’ effect
continues to gather momentum, despite recent product safety scares, and the question now is whether the prospect of a
preferential trade agreement with China will offer anything to our manufacturing exporters, or just more of the same
unequal playing field that exists right now”.
CANTERBURY MANUFACTURERS' ASSOCIATION
Survey of Business Conditions – October 2006 compared with October 2007
SAMPLE SIZE: The Survey respondents represent elaborate transformed manufacturers with annual sales of approximately
$418 million.
CHANGE OVER 12 MONTH PERIOD
(The table below represents the above returns expressed as percentages)
Oct Sept
TOTAL TURNOVER: Export /Domestic ratio 44/56 48/52
% Change in Total Turnover INCREASED 8.09 -9.49
DOMESTIC TURNOVER: % of respondents reporting a rise 80 36
% of respondents reporting a fall 20 45
% of respondents reporting no change 0 18
% Change in Ave Domestic Turnover INCREASED 22.89 -.60
EXPORT TURNOVER: % of exporters reporting a rise 66 30
% of exporters reporting a fall 33 50
% of exporters reporting no change 0 20
% Change in Average Export Turnover DECREASED -6.18 -17.59
STAFF NUMBERS: % of respondents reporting a rise 81 54
% of respondents reporting a fall 18 18
% of respondents reporting no change 0 27
% Change in Average Staff Numbers INCREASED 6.88 3.53
CHANGE OVER 12 MONTH PERIOD
(The table below represents the above returns expressed as percentages.)
Large Fall
(Over 15%) Modest Fall
(2.5%-15%) No Change
(Within 2.5%) Modest Rise
(2.5%-15%) Large Rise
(Over 15%)
Oct Sept Oct Sept Oct Sept Oct Sept Oct Sept
Profitability (YoY) 33 15 8 31 25 23 25 31 8 0
Cashflow (YoY) 6 0 33 31 33 46 17 15 8 8
Exchange Rate (YoY) 17 15 17 38 25 31 33 15 8 0
Investment Forecast 0 8 42 23 17 38 33 8 8 23
Sales Forecast 0 0 25 25 8 33 67 33 0 8
Profit Forecast 8 8 17 17 8 33 67 42 0 0
Staffing Forecast 0 0 17 25 50 58 33 17 0 0
Very
Negative Negative Neutral Positive Very
Positive
Confidence 0 8 33 15 33 46 33 31 0 0
Constraint Production Skilled Staff Capital Market
17 8 25 15 0 0 58 77
Net Confidence Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
2003 +21 -6 +12 -11 -5 +12 -6 0 +11 +40 +29 +33
2004 +5 +19 +41 +41 +36 +50 +12 +20 +7 0 -7 +5
2005 +13 -13 -6 -25 -33 -13 -13 -36 -27 -32 -29 -33
2006 -47 -13 -23 -29 -42 -13 -14 +8 +15 -7 40 0
2007 -17 0 -8 25 8 -17 -60 -18 +8 0
Index
(base =100) Oct
06 Nov 06 Dec 06 Jan 07 Feb 07 Mar
07 April
07 May 07 June 07 July 06 Aug 07 Sept 07 Oct
06
Performance 93 101 91.5 98 93 94 95 96 95.5 96 98.5 98 97
Forecast 101 108 102 101 101 102 105 102 102 99 102 101 103
Change 102 107 100 100 100 99 99 103 103 102 103 101 104
ENDS