Happier days?

29 September 2006

Happier days?

The latest Canterbury Manufacturers’ Association (CMA) Survey of Manufacturers completed during September 2006, shows total sales in August 2006 increased 11% (export sales up 15.4% and domestic sales increased 6.7%) on August 2005.

The CMA survey sample this month reported NZ$490m in annualised sales, with an export content of 51%.

Net confidence returned +8; an improvement from -14 last month.

The current performance index (a combination of profitability and cash flow) is at 95 down from 96 last month, the change index (capacity utilisation, staff levels, orders and inventories) increased to 99, and the forecast index (investment, sales, profitability and staff) rose to 104 from 97 in July 06. Anything less than 100 indicates a contraction.

Constraints focused on markets 92% and staff at 8%.

Staff numbers for August decreased by 1%, continuing the slow up in the rate of jobs lost in the sector.

“There is a sense of buoyancy within the manufacturing sector at present and companies have experienced upward momentum in the number of new orders being placed and slowing in the sales figures”, says Association CEO John Walley.

“Our members report that parts of the domestic market and specific export niches are strong and as a result, revenues are increasing on the same time last year. Confidence was in positive territory for the first time since January 2005; however when the survey was open the US and Australian cross rate stood at 63 and 84 not over 65 and 88 respectively a week later so the result might have been very different.

“It is worth noting that as half our member’s revenue flows from export markets, sentiment and performance are highly linked to exchange rates”.

“Building export revenues takes a long time and a good deal of effort. The volatility of the New Zealand dollar remains the major concern. If New Zealand is to build exports and close the trade deficit by selling more, policy has to be more concerned with addressing our yo-yo currency.

“So far this year we have seen several high quality furniture manufacturers throw I the towel and major job losses in some iconic New Zealand companies. There is little room for complacency, improvements are there but they are fragile and off a low base. Future intentions are expansionary but again that position is very fragile.”

ENDS

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