Feeling a bit better but still worried

Feeling a bit better but still worried – 7 June

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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during May 2013, shows total sales in April 2013 increased 3.28% (export sales increased by 0.76% with domestic sales increasing 5.53%) on April 2012.

The NZMEA survey sample this month covered NZ$489m in annualised sales, with an export content of 46%.

Net confidence rose to -9, up from the -50 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 101, up from 92.5 in March, the change index (capacity utilisation, staff levels, orders and inventories) went up to 100 from 99 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 99.75, up on March’s result of 97. Anything less than 100 indicates a contraction.

Constraints reported were 82% markets, 9% production capacity and 9% skilled staff.

Staff numbers for April decreased year on year by 0.74%.

“This month’s results are a bounce back from last month, driven mostly by improved domestic sales. Export sales improved from their negative position last month. Generally trends are flat to negative.” says NZMEA Chief Executive John Walley.

“Falling staff numbers reinforces a soft declining overall trend, that said manufacturers continue to report difficulties in finding skilled staff.”

“Net confidence improved but is still in negative territory - the number of optimists continues to decline.”

“For exporters, markets are soft, and improving domestic demand is little help for those who operate predominately in export markets.”

“A recent RBNZ speech from Graeme Wheeler expressed a more pessimistic sentiment than usual, reflecting concerns over the overvalued dollar, increasing current account deficit and risks in the housing and credit markets to financial stability. We have expressed this view for some time and encourage the RBNZ to be much more active around these concerns. Given the comments from Bill English around currency the independence of the RBNZ may well be tested in the coming months, as they face up to the need to do more than talk.”

“Government and the RBNZ cannot ignore the exchange rate pressures on the real economy that flow from monetary policy contrasts. We saw a play through of quantitive easing in the USA on Ford in Australia. It is hard to be competitive with an overvalued Australian dollar, as a result of US monetary policy and work through the storm of currency impacts when the US head office is under pressure to repatriate jobs into the US.”

ends

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