Aggregate performance is great but confidence sinks

Confidence fell in our survey of Canterbury manufacturers completed in SEPTEMBER reinforcing the trend that has developed during the first half of 2002. “A reduction in the number of optimists and an increase in the number of pessimists saw the net confidence reported in SEPTEMBER fall to -31 down from -19 reported in our AUGUST results.” said John Walley, CEO of the Canterbury Manufacturers' Association, "The trend has shown the odd blip this year but the steady trend of eroding confidence is clear in the responses.”

Overall dollar sales increased for the month of AUGUST by around 23% on AUGUST 2001, with domestic sales up about 10% and export sales up by 37%. “On the face of it a good result, however looking deeper we see about 55% of reporting companies indicating a fall in sales.” said Mr Walley. “So it is clear that the good news is patchy and this perhaps accounts for the apparent conflict in aggregate performance and feelings.”

Staff numbers have increased by around 3.5% on the same period last year. In the survey completed in SEPTEMBER our leading indicators - staff, investment and profitability improved but turnover expectations softened. "For the next quarter things are expected to hold up, further out feelings are somewhat on the negative side,” said John Walley.

From the constraint standpoint, market conditions were cited at the same level as last month at 75% with staff constraints falling to 6% and capacity the limit in 19% of respondents and capacity limits at 13%. Capital is not a constraint for respondents.

"Key problems were noted on existing levels of compliance and threats of increasing compliance and regulation noted in the media. Last month we expressed concerns about the performance of the Lyttleton Port Company. These seem to be increasing, as are concerns about A$ cross rates and trading partner performance - particularly Japan, USA and Australia,” commented John Walley.

Our dream run is over, we need to get into the hard grind of transforming New Zealand’s economy and building the manufacturing sector. Microeconomic reform to favour development of the manufacturing sector is much more important to real and sustained growth than the recent changes in the Policy Targets Agreement,” said John Walley. “In the past Canterbury has always acted as a leading indicator for New Zealand and we should be careful not to confuse current performance with the need to invest in policies and practices that look ahead, transforming what we do today into the growth of tomorrow.”

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