Manufacturing growth still flat

Manufacturing growth still flat

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during May 2012, shows total sales in April 2012 decreased 1.51% (export sales increased by 5.41% with domestic sales decreasing 6.09%) on April 2011.

The NZMEA survey sample this month covered NZ$428m in annualised sales, with an export content of 43%.

Net confidence rose to 9, up from the -20 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 101, up from 99 in March, the change index (capacity utilisation, staff levels, orders and inventories) remained steady at 101, and the forecast index (investment, sales, profitability and staff) is also steady at 102. Anything less than 100 indicates a contraction.

Constraints reported were 91% markets and 9% production capacity.

Staff numbers for April decreased year on year by 3.38%.

“There is a continuation of the flat line we have seen in manufacturing for the past few years,” says NZMEA Chief Executive John Walley. “Generally the story of sales just holding up, but weak order books and a lack of confidence in future prospects remains prominent.”

“The big concern of the past six months or so has been staff numbers. Since September last year we have seen a contraction in staff numbers which suggests manufacturers are reducing capacity underscoring the soft expectations – not a good long-term prospect.”

“Comments on overseas markets were that the United States is looking stronger than Europe and that exports to Australia are suffering as firms exporting from Australia struggle with their high exchange rate.”

“Exchange rate difficulties once again led the list of threats to manufacturers.”

“Some insurance claims are getting settled in Christchurch which is encouraging, but there are still some hold ups particularly with the building elements of insurance claims.”

“The Budget was largely a disappointment for manufacturers and exporters. There were some helpful tweaks such as the increased funding for research and development, however, on the whole it kept the status quo which has seen the traded sector stagnate since 2004.”

“The expanding current account deficit forecasts were of particular concern and these must be a priority for the Government. The current account needs much more policy focus.”

“Hard decisions on balancing the tax system, managing the exchange rate and addressing massive costs like superannuation are needed to support growth in the traded sector.”

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