Exporter Confidence Drops

Exporter Confidence Drops As Overseas Trading Conditions Deteriorate

Exporters’ business confidence slumped over the past three month, reveals the NZIER December 2002 Quarterly Survey of Business Opinion for manufacturing exporters commissioned by Trade New Zealand.

A seasonally adjusted net 28 per cent of exporters expect general business conditions to deteriorate over the next six months, compared to a net eight per cent of non-exporting firms expecting deterioration.

The survey attributes the fall in business confidence to a likely consequence of the appreciation of the NZ dollar against the US and Australian currencies over the last quarter. It also highlights concerns about overseas trading conditions, particularly tensions in the Middle East.

However despite declining business confidence, export growth is expected to remain robust, with a net 24 per cent of firms expecting increases in sales in the next three months.

Trade New Zealand Chief Executive Fran Wilde said the results were not unexpected.

“The steadily rising Kiwi dollar is cutting into profitability. Although export sales are expected to increase, some of this will simply balance lower returns. The lesson is one that New Zealand exporters have had to learn the hard way in the past – driving your business on price alone is unsustainable and risky,” Wilde said.

“An increasing number of New Zealand businesses have shown that other aspects, such as quick turnaround, flexibility to respond rapidly to changes in customer preferences and after-sales service, are critical ingredients of maintaining successful trading relationships in the longer term”.

A net 17 per cent of all manufacturing and building firms reported a rise in staff levels this quarter with exporting and non exporting firms reporting similar rises.

Australian manufacturers are also pessimistic about future business conditions. A net 11 per cent of firms expect the general business situation to deteriorate over the next six months, compared to a net 10 per cent expecting deterioration in the previous survey. Australian firms are expecting modest growth in export sales and output in the next three months.

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