Sales continue to bounce along the bottom - 7 October

Sales continue to bounce along the bottom - 7 October

For a results table and historical data click here http://www.realeconomy.co.nz/215-sales_continue_to_bounce_along.aspx.

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during September 2011, shows total sales in August 2011 decreased 5.7% (export sales decreased by 5.9% with domestic sales decreasing 5.6%) on August 2010. The NZMEA survey sample this month covered NZ$581m in annualised sales, with an export content of 42%.

Net confidence dropped to -30, down from -22 last month.

The current performance index (a combination of profitability and cash flow) is at 97.5, up from 96 in July, the change index (capacity utilisation, staff levels, orders and inventories) remained steady at 99, and the forecast index (investment, sales, profitability and staff) is at 100, down on July’s result of 103. Anything less than 100 indicates a contraction.

Constraints reported were 60% markets, 20% skilled staff and 20% production capacity.

Staff numbers for August increased year on year by 10.9%.

“Sales are bouncing around from month to month reflecting uncertainty in most markets,” says NZMEA Chief Executive John Walley. “The effects of the European crisis and the high dollar have seen sales and returns drop year on year.”

“Manufacturers selling to Europe and the United States are reporting low margins and some firms have described those markets as a write off.”

“Exports to Australia are still tracking well but forward orders have dried up and there are concerns that the construction sector is slowing.”

“Construction sales are starting to pick up in Christchurch but cash finding its way into rebuild activity is still thin on the ground. Feedback from manufacturers suggests that insurance premiums have risen about 80 percent on average and earthquake damage excesses are rising steeply.”

“Overall the exchange rate remains the biggest issue facing the tradable sector, and in the medium term, the New Zealand economy as demonstrated by our recent credit downgrade.”

“Sales are variable due to market issues, but it is the exchange rate that is reducing margins on the export sales that remain. A lower and more stable exchange rate is crucial if we are to address a structural current account deficit without major pain across our economy.”

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.

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