Positive Sentiments Continue

1 August 2006 - Available for Immediate Release

Positive Sentiments Continue

The latest Canterbury Manufacturers’ Association (CMA) Survey of Manufacturers completed during July 2006, shows total sales in June 2006 increased over 25% (export sales up 21% and domestic sales increased 30%) on June 2005.

The CMA survey sample this month reported NZ$636m in annualised sales with a 50% export content.

Net confidence increased from -42 to -13 from last month.

The current performance index (a combination of profitability and cash flow) remains at 94 down from 95 last month, the change index (capacity utilisation, staff levels, orders and inventories) is slightly down to 97, the forecast index (investment, sales, profitability and staff) rose to 99. Anything less than 100 indicates a contraction.

Constraints focused only on markets (80%) and capital (7%).

Staff numbers continued to fall to just over 11%; a trend that has been in place since June 05.

"Manufacturers were beginning to feel more positive about business conditions and outlook towards the end of May", says Chief Executive John Walley, "However, whereas the results for May sent mixed messages, those for June show sure signs that the positive sentiments were correct".

"Confidence within the manufacturing sector increased in June and these figures are more in line with business conditions. Both domestic and export sales have increased strongly".

"However, while the trend in loss of staff has slowed, this remains an area of concern for manufacturers as are input costs such as rising prices for raw materials, sourced locally and overseas. The World Cup slowed things up in Europe and the hangover seem to have extended to the Northern summer holidays, it will be September before that slow down works its way through the system."

"Supplies to the commercial building sector seem to be holding but suppliers into retail channels continue to report high retail inventories slowing sales."

"Nevertheless, the June survey results indicate that while Manufacturers remain cautious about conditions and the outlook for the sector, the encouraging trends are continuing and they are beginning to see a more positive future."

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Website: http://www.cma.org.nz/index.cfm/News___Surveys/Business_Survey/Latest

ENDS

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