Sales down - 2 March

Sales down - 2 March

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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during February 2012, shows total sales in January 2012 decreased 1.39% (export sales increased by 8.16% with domestic sales decreasing 6.41%) on January 2011.

The NZMEA survey sample this month covered NZ$440m in annualised sales, with an export content of 38%.

Net confidence dropped slightly to 8, down from the 10 result reported last month.
The current performance index (a combination of profitability and cash flow) is at 101, down from 104.5 in December, the change index (capacity utilisation, staff levels, orders and inventories) went up to 102 from 100 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 106.25, up on December’s result of 104.75. Anything less than 100 indicates a contraction.

Constraints reported were 92% markets and 8% production capacity

Staff numbers for January decreased year on year by 4.13%.

“A drop in sales this month and falling staff numbers for the past five months indicate that a recovery is still a distant prospect,” says NZMEA Chief Executive John Walley. “Markets remain a constant problem and the exchange rate has cut margins to a point where some firms are questioning whether to abandon export markets.”

“A split between Northern and Southern Europe is getting more pronounced as Southern Europe continues to suffer debt and confidence problems while in Northern Europe it seems to be business as usual. Payments by instalment are increasing in Southern Europe and South America from businesses that have previously been able to pay in full. Chasing late payments is starting to present significant costs for some firms.”

“The exchange rate appreciation has hit margins in Europe hard and there are reports of manufacturers in Australia suffering the same problem, making sales difficult for New Zealand manufacturers that are part of their supply chains.”

“In Christchurch the goalposts keep changing on manufacturers looking to rebuild and repair buildings. Insurance difficulties and on-going uncertainty around planning and rebuild issues remain as barriers to getting things done. Delays have burnt off the business interruption indemnity period for many and resolution seems some way off. One respondent reported having to deal with 6 loss adjusters so far and still no outcome!”

“Another firm with only minor damage has pointed out that that their repair bill would be repaid within two years with the higher premiums now being charged by insurers.”

“Respondents have rated the exchange rate as the major barrier to investment in the traded sector. The problem is having much more impact than when the currency was in the eighty cents US range in 2007 and 2008, as back then volume made up for some of the difficulty. Now with lower volumes and policy differences between here and the big economies, there is no prospect of lower rates any time soon.”

“There are a number of firms considering whether they can continue to do business from New Zealand.”

The New Zealand Manufacturers and Exporters Association survey gathers results from members around New Zealand. It provides a monthly snapshot of manufacturers and exporters’ sales and sentiment

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