Sales flatten out but jobs still under threat

5 February 2010

Sales flatten out but jobs still under threat

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during January 2010, shows total sales in December 2009 decreased 6% (export sales decreased by 7% with domestic sales decreasing 4%) on December 2008.

The NZMEA survey sample this month covered NZ$482m in annualised sales, with an export content of 42%.

Net confidence rose to -11, up from the -23 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 101.5, up from 98.5 in October, the change index (capacity utilisation, staff levels, orders and inventories) went down to 101 from 103.75 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 98, down on the previous result of 101. Anything less than 100 indicates a contraction.

Markets were the only reported constraint.

Staff numbers for December decreased year on year by 17%.

“Sales look to be bottoming out for manufacturers, with markets picking up, albeit in patchy fashion,” says NZMEA Chief Executive John Walley. “However, staff numbers are continuing to track down as those firms in poorer performing markets continue to shed staff and those in better markets take advantage of spare capacity rather than hiring. The higher than expected unemployment rate of 7.3% announced by Statistics New Zealand yesterday reflected this trend.”

“Confidence has improved again but comments about uncertainty still dominate. The uncertainty surrounding the recession means that purchase orders generally remain short-term. This leaves many firms living on a month to month basis. On the investment side many firms have identified research and development projects, but remain unwilling to invest while policy settings hold up the currency.”

“The Government’s intentions to follow through on the advice given by the Tax Working Group in this year’s budget to broaden the tax base to include property, and to incentivise saving with a higher GST rate are a start. Hopefully we will see more action around the findings of the Capital Market Development Taskforce as well, because these are the sort of changes that encourage firms to invest further – the real economy matters and policy has long ignored that point.”

“The glaring omission from advice sought by the Government last year was any effort around stabilising the New Zealand dollar. It is notable that as the dollar has become increasingly volatile over the past decade, investment intentions and confidence throughout the tradeable sector have slowly ebbed away.”

“A more even-handed tax system and monetary policy reform are necessary to see firms investing in export development and jobs.”

The New Zealand Manufacturers and Exporters Association survey gathers results from members around New Zealand. It provides a monthly snapshot of manufacturers and exporters’ sales and sentiment.

NEW ZEALAND MANUFACTURERS AND EXPORTERS ASSOCIATION
Survey of Business Conditions – December 2009 compared with December 2008

SAMPLE SIZE: The Survey respondents represent elaborate transformed manufacturers with annual sales of approximately $482 million.

CHANGE OVER 12 MONTH PERIOD
(The table below represents the above returns expressed as percentages)
December October
TOTAL TURNOVER: Export /Domestic ratio 42/58 44/56
% Change in Total Turnover DECREASED -6 -13

DOMESTIC TURNOVER: % of respondents reporting a rise 50 41
% of respondents reporting a fall 37 58
% of respondents reporting no change 12 0
% Change in Ave Domestic Turnover DECREASED -4 -7

EXPORT TURNOVER: % of exporters reporting a rise 25 33
% of exporters reporting a fall 62 58
% of exporters reporting no change 12 8
% Change in Average Export Turnover DECREASED -7 -20

STAFF NUMBERS: % of respondents reporting a rise 11 23
% of respondents reporting a fall 66 61
% of respondents reporting no change 22 15
% Change in Average Staff Numbers DECREASED -17 -13

CHANGE OVER 12 MONTH PERIOD
(The table below represents the above returns expressed as percentages.)

Large Fall
(Over 15%) Modest Fall
(2.5%-15%) No Change
(Within 2.5%) Modest Rise
(2.5%-15%) Large Rise
(Over 15%)
Dec Oct Dec Oct Dec Oct Dec Oct Dec Oct
Profitability (YoY) 33 31 11 23 0 15 11 15 44 15
Cashflow (YoY) 22 8 0 15 33 38 33 31 11 8
Exchange Rate (YoY) 22 31 22 15 11 31 33 15 11 8
Investment Forecast 22 15 11 8 33 31 22 38 11 8
Sales Forecast 11 0 11 23 22 31 33 15 22 31
Profit Forecast 11 0 22 31 22 23 22 38 22 8
Staffing Forecast 11 0 11 23 56 31 22 46 0 0
Very
Negative Negative Neutral Positive Very
Positive
Confidence 11 15 22 31 44 31 22 23 0 0
Constraint Production Skilled Staff Capital Market
0 23 0 0 0 0 100 77

Net Confidence Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
2004 +5 +19 +41 +41 +36 +50 +12 +20 +7 0 -7 +5
2005 +13 -13 -6 -25 -33 -13 -13 -36 -27 -32 -29 -33
2006 -47 -13 -23 -29 -42 -13 -14 +8 +15 -7 40 0
2007 -17 0 -8 25 8 -17 -60 -18 +8 0 -8 -9
2008 +8 -10 -36 -33 -40 -55 -33 -22 -91 -82 - -73
2009 -54 -42 -42 -50 -58 -27 -17 -27 -17 -23 - -11

Index
(base = 100) Nov 08 Dec 08 Jan 09 Feb 09 Mar
09 Apr 09 May
09 June 09 July 09 Aug
09 Sept
09 Oct 09 Nov 09 Dec 09
Performance - 96 90.5 94 89.5 91 88.5 91 95 96 98 98.5 - 101.5
Forecast - 91.25 88 90.25 96.75 91.25 89.75 95.75 98.5 97.25 98.5 103.75 - 101
Change - 96 94 92 91 94 94 96 97 101 95 101 - 98

ends

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