RBNZ more than talk

RBNZ more than talk - 3 October

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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions, completed during September 2014, shows total sales in August 2014 decreased 1.01% (year on year export sales increased by 14.1% with domestic sales decreasing 13.24%) on August 2013.

The NZMEA survey sample this month covered NZ$495m in annualised sales, with an export content of 52%.

Net confidence was at 27, up from 0 in our survey last month.

The current performance index (a combination of profitability and cash flow) is at 97.3, up from 96 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 103, up from 100 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 106.67, up on the last result of 102.83. Anything less than 100 indicates a contraction.

Constraints reported were 47% markets, 33% production capacity, 13% skilled staff and 7% capital.

Net 27% of firms reported a modest rise in productivity for August.

Staff numbers for August increased year on year by 2.50%.

Tradespersons, supervisors, operators/labourers and professionals/scientists reported a moderate shortage, while managers reported a minor shortage.

"The trends we have seen recently continue, domestic sales falling, with export sales making up for the soft domestic market. Net confidence bounced back somewhat from last survey, as did all three index measures.”

“This recent positive trend in export sales has improved sentiment somewhat, with many feeling more optimistic, though cautiously, than they have in some time.”

“The responses in September saw the market and production capacity constraints fall, while the skilled staff and capital constraints increased.”

“This week revealed that the Reserve Bank of New Zealand (RBNZ) had in fact intervened in the currency market during August, selling a net $521m NZD. The RBNZ have been warning and expressing concern over the value of our currency for some time now – it is great to see them take decisive action to bring the dollar down.”

“While the currency remains overvalued, this gives some credibility to the RBNZ's threats, and we hope they continue to try and bring the exchange rate down towards fair value."

“Persistent over or under valuation of the currency sends the wrong signals to the economy that can have lasting problems.”

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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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