A better but uncertain end to the year – 21 December

A better but uncertain end to the year – 21 December

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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during December 2011, shows total sales in November 2011 increased 4.24% (export sales increased by 10% with domestic sales increasing 0.97%) on November 2010.

The NZMEA survey sample this month covered NZ$509m in annualised sales, with an export content of 38%.

Net confidence rose to 11, up from the -10 result reported last month.
The current performance index (a combination of profitability and cash flow) is at 106, up from 103 in October, the change index (capacity utilisation, staff levels, orders and inventories) remained steady at 104.25, and the forecast index (investment, sales, profitability and staff) is at 104, up on October’s result of 100. Anything less than 100 indicates a contraction.

Constraints reported were 78% markets and 22% production capacity.

Staff numbers for November decreased year on year by 5.82%.

“In general manufacturers are seeing reasonable sales now but at very slim margins due to an exchange rate that remains significantly overvalued,” says NZMEA Chief Executive John Walley. “Firms seem nervous about next year with the problems in Europe – no one can call the outcome, it could be anything from a slight downturn in markets to a complete breakup of the Euro.”

“The continuing decline in staff numbers highlights the uncertainty around next year’s sales.”

“Confidence has improved on last month, but there was an increase in the number of respondents reporting markets as their major constraint.”

“Respondents also noted that they are spending significant amounts of time chasing bad debts.”

“2011 has really been a holding pattern for manufacturers with sales up on last year but future prospects not improving.”

“Overall the feeling from manufacturers is one of uncertainty - margins are tight and markets are fragile. Changes to Government policy to support the traded sector, particularly through monetary policy reform, remain top of the list for manufacturers in the new year.”

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