Market conditions still a challenge - 4 December

Market conditions still a challenge - 4 December

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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during November 2015, shows total sales in October 2015 decreased 5.70% (year on year export sales decreased by 8.25% with domestic sales decreasing 0.88%) on October 2014.

The NZMEA survey sample this month covered NZ$366m in annualised sales, with an export content of 64%.

Net confidence fell to 6, down from 23 in September.

The current performance index (a combination of profitability and cash flow) is at 103.7, up from 102.3 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 100, up from 97 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 106.5, up on the last result of 104.83. Anything over 100 indicates expansion.

Constraints reported were 82% markets, 12% production capacity and 6% skilled staff.

Net 24% of firms reported a modest rise in productivity in October.

Staff numbers for October reported no change on the same month last year.

Tradespersons, supervisors, managers, professional/scientists and operators/labourers all reported a moderate shortage.

“Domestic sales fell back after last month’s good result, largely unchanged to sales in October 2014. Export sales also felt a drop in October moving into the negative compared with the same month in 2014; this was after a flat sales result last month. This is somewhat disappointing, as we had hoped last months results were a positive sign of a turnaround in trend – these lower results may reflect challenges in the global environment, as well as a slowing domestic economy. The very high market constraint of 82% shows the extent to which market conditions are effecting manufacturers.” says NZMEA Chief Executive Dieter Adam.

“Staff numbers remained flat in October and confidence fell after the boost it felt in September. Despite these results all three index measures saw increases, suggesting there are still improvements being made in business operation and profitability, as well as more optimistic forecasts for the future.

“The most recent Overseas Merchandise Trade release from Statistics New Zealand gave encouraging export values for a particular sub-sector of manufacturing. Specifically, the last two months have seen the highest export values for electrical equipment and machinery manufacturing since May 2012.

“Manufacturers and exporters have shown themselves to be extremely resilient in the face of trying times in recent years. Given a policy focus on growing the sector, encouraging innovation, R&D, fostering skills and leveraging changing technology, manufacturers can provide even more to our country, through growth, exports and skilled employment.” says Dieter.
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