Jingle Bells?

22 December 2006

Jingle Bells?

The latest Canterbury Manufacturers’ Association (CMA) Survey of Manufacturers completed during December 2006, shows total sales in November 2006 increased over 28% (export sales up around 44% and domestic sales increased over 15%) on November 2005.

The CMA survey sample this month reported NZ$559m in annualised sales, with an export content of 50%.

Net confidence increased to 40, an increase from -7 last month.

The current performance index (a combination of profitability and cash flow) is at 101, up from last month’s 93, the change index (capacity utilisation, staff levels, orders and inventories) increased to 107 from 102 last month, and the forecast index (investment, sales, profitability and staff) lifted to 108 from 101 compared with October 06. Anything more than 100 indicates expansion.

Constraints reported were 13% Production, 19% Staff, 13% Capital and Markets 56%.

Staff numbers for October decreased to just over -11.8%.

“Many companies across the manufacturing sector are busy as the New Year approaches and both domestic and export sales have lifted in the past month. This was expected to happen with the Christmas period now upon us and that hope is that these strong sales figures continue into next year. The signs are there and many firms have said that their forward orders are strong – some out beyond March 2007. The Australian market continues to indicate strongly for the next 12 months and there is optimism for the early part of 2007”, says Chief Executive John Walley.

“It is worth noting the metals content in our survey; the significant increases in copper prices have seen substantial rises is sales not product volumes, nevertheless the results are pretty good.”

“The New Zealand dollar remains strong against the US and Australian currencies which will dent margins for most exporters”

”Buoyant consumer spending, inflation pushing interest rates, could see the New Zealand dollar over and above $USD70 cents and that is a worry. If the dollar hangs above that rate the shine will quickly fade on any export led improvement in the trade numbers – not a good look for the upcoming ‘Export Year’. “Overall numbers employed are falling faster than has been the case for some time, but problems remain in recruitment for key technical and management roles.”

“All up this is the most positive survey since June 2004. The immediate future looks strong from a sales perspective and if productivity can continue to offset currency and input cost impacts, at least the first half of 2007 is expected to be good.”

“The downside is the possibility of further currency appreciation as the RBNZ ineffectively pushes back against domestic inflation pressures. The supply side worries are increasing material costs and some materials on allocation as a result of global demand. However, for the minute, it looks like manufacturers will enjoy a merry Christmas and anticipate something of a happy New Year.”

ENDS

© Scoop Media