Economy operating at two-speeds

Economy operating at two-speeds

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during October 2013, shows total sales in September 2013 decreased 7.88% (export sales decreased by 17.91% with domestic sales increasing 5.63%) on September 2012.

The NZMEA survey sample this month covered NZ$414m in annualised sales, with an export content of 51%.

Net confidence fell to 0, down from the 18 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 98.3, down from 100.7 in August, the change index (capacity utilisation, staff levels, orders and inventories) was at 100, down from 102 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 102, down on Augusts’ result of 105. Anything less than 100 indicates a contraction.

Constraints reported were 78% markets, 11% production capacity and 11% skilled staff.

Productivity for September was unchanged from last survey.

Staff numbers for September increased year on year by 1.95%.

There was a moderate staff shortage reported for operator/labourers, tradespersons, supervisors, and professional/scientists and managers.

“Once again we can see that exports are continuing to struggle, while growth in the domestic economy is expanding domestic sales, we continue to see a two-speed economy.” says NZMEA Chief Executive John Walley.

“Confidence and index measures have all fallen on last month, making this survey generally less positive.”

“After a couple of months of a slightly lower currency, the upward pressure resumed. The Government shutdown in the U.S will delay the start of the taper of the Federal Reserve’s bond buying programme, and we have even seen the Reserve Bank of Australia comment about the possibility of their own currency intervention.”

“The Reserve Bank of New Zealand has made comment that the high dollar is helping to keep inflation under control, giving them the ability to lower or delay their future OCR increases. While this is great for consumers, the overvalued currency is having a damaging effect on our exporters and import competing manufacturers. The longer this continues, investment will be delayed, with on-going impacts on the growth of onshore activity, jobs, competitiveness and innovation.”

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