Confidence takes a hit

Confidence takes a hit - 2 April

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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during March 2015, shows total sales in February 2015 decreased 18.20% (year on year export sales decreased by 27.06% with domestic sales increasing 10.08%) on February 2014.

The NZMEA survey sample this month covered NZ$178m in annualised sales, with an export content of 68%.

Net confidence fell to -13, down from 21 in January.

The current performance index (a combination of profitability and cash flow) is at 95.3, down from 100.3 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 99, down from 100 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 102.33, down on the last result of 106.5. Anything over 100 indicates expansion.

Constraints reported were 53% markets, 40% production capacity, and 7% capital.

Net 7% of firms reported a modest rise in productivity in February.

Staff numbers for February decreased 1.75% year on year.

Tradespersons, supervisors, managers, professional/scientists and operators/labourers all reported a moderate shortage.

Domestic sales improved year on year for the third month in a row – this followed falling sales felt between July and November 2014. Year on year export sales fell back into negative territory after January saw improved sales – some of this reduction was in part due to large falls in particularly large contributors in February.

Confidence fell into negative territory for the first month since April 2013. That was accompanied by falls in all three index measures: performance, forecast and change. Staff numbers also fell, for only the third time in the past year.

“Being one of our largest markets, weak demand and returns from Australia is becoming an increasing issue for manufacturers, along with the weak Australian dollar (AUD), hitting many who sell products in this currency. For many it is like the tap has been turned off, and for most, prices cannot be raised to off-set. Similar conditions continue to be felt for exporters to Europe and high volatility of the currency remains a challenge for almost all exporters." said NZMEA President Tom Thomson.

“The New Zealand dollar reached record highs against the AUD in March, and remains elevated on a TWI basis; we have received some concerned comments recently from members on this issue.” says Tom Thomson.

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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