Sales Improve – 3 September

Sales Improve – 3 September

Historical survey data can be found here.

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during August 2010, shows total sales in July 2010 increased 16% (export sales increased by 15% with domestic sales increasing 18%) on July 2009.

The NZMEA survey sample this month covered NZ$348m in annualised sales, with an export content of 39%.

Net confidence rose to 30, up from the 0 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 103.5, up from 99 in June, the change index (capacity utilisation, staff levels, orders and inventories) went down to 101 from 103 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 105.5, down on June’s result of 107. Anything less than 100 indicates a contraction.

Constraints reported were 75% markets and 10% capital and 20% skilled staff.

Staff numbers for July increased year on year by 7%.

“The combination of more substantial sales growth and a lift in confidence is encouraging,” says NZMEA Chief Executive John Walley. “Earlier in the year we had a ‘dead cat’ bounce with confidence surveys predicting a strong recovery, but this set of statistics with sales and staff numbers increasing is far more convincing. Increases in export sales add substance to the recovery”

“The future expectations and index numbers confirm this upward trend.”

“Markets have remained a major concern and this presents the biggest threat to the recovery. If the United States and Europe experience a double dip recession there is every reason to expect we will be dragged down with them. Some decent growth numbers in Asia will not be enough to sustain our export sector on their own. With a return to hiring in the manufacturing sector we are also starting to see some skill shortages in key areas.”

“A third Official Cash Rate rise in September has the potential to add to the damage done by the earlier increases and to further destabilise any recovery. The RBNZ tightened far too early and a pause has now been signalled, any failure to follow through will be costly.”

“The work of the Savings Working Group should be positive for manufacturers as this represents a major source of our economic problems, but the restrictions imposed by the terms of reference will limit its effect. It is difficult to assess the savings problem without looking at tax issues which determine where savings are likely to be invested and superannuation entitlements which determine how and when savings will be spent. There is little point setting up these working groups if they are not allowed to conduct a full analysis of the issues and if findings are largely ignored as they have been with earlier working group reports.”

“If we save more but returns on domestic investment are poor due to fiscal policy distortions, then higher savings would rightly be invested offshore. Such an outcome would do little for domestic growth and jobs. We need complete answers if progress is to be made.”

ENDS

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