Sales drop after earthquake but forecasts hold up

Sales drop after earthquake but forecasts hold up – 8 April

Historical survey data is available here.

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during March 2011, shows total sales in February 2011 decreased 13% (export sales decreased by 26% with domestic sales decreasing 5%) on February 2010.

The NZMEA survey sample this month covered NZ$383m in annualised sales, with an export content of 32%.

Net confidence fell to -13, from the -11 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 97.5, down from 100 in January, the change index (capacity utilisation, staff levels, orders and inventories) went down to 101 from 102 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 101.25, down on February’s result of 104.5. Anything less than 100 indicates a contraction.

Constraints reported were 75% markets, 13% skilled staff and 13% production capacity.

Staff numbers for February decreased year on year by 1%.

“Sales have dropped as expected due to the impact of the earthquake in late February,” says NZMEA Chief Executive John Walley. “The good news is that confidence has not plummeted and the forecast index is still in positive territory.”

“This indicates that for those who have not had a plant completely destroyed or been cordoned off from their business most expect to be able to fill their orders. The feedback we are getting from members is that most will be able to catch up and supply all of their back orders, but it has taken considerably more than normal efforts to do so.”

“We will see less disruption in the March figures. April will see a more ‘normal' post-earthquake picture of sales and production.”

“There has been some talk of concerned overseas customers who are unsure about the ability of Christchurch firms to fill orders. The message is that Christchurch manufacturers are working hard and their customers are seeing pretty much delivery as usual.”

“As in previous months a low cross rate against the Australian dollar will continue to help while the high cross rates against the US Dollar and Euro are hindering the recovery.”

“As the cost of rebuild continues to escalate better policy settings for exporters are needed more than ever. Yes we have had an earthquake or two but global recessions, disasters elsewhere and absent tourists leave a big hole to be filled.”

ENDS

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