Still waiting on a real recovery – 4 February

Historical survey data is available here.

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during January 2011, shows total sales in December 2010 decreased 0.9% (export sales decreased by 6% with domestic sales increasing 2%) on December 2009.

The NZMEA survey sample this month covered NZ$510m in annualised sales, with an export content of 37%.

Net confidence rose to 33, up from 23 last month.

The current performance index (a combination of profitability and cash flow) is at 102.5, up from 102 in November, the change index (capacity utilisation, staff levels, orders and inventories) went up to 105 from 101 in the last survey, and the forecast index (investment, sales, profitability and staff) is steady at 107.5 Anything less than 100 indicates a contraction.

Constraints reported were 92% markets and 8% skilled staff.

Staff numbers for December increased year on year by 2%.

“We have seen a decline in the expansion of sales, year on year, since the middle of 2010 and in December 2010 sales are lower than in December 2009,” says NZMEA Chief Executive John Walley. “Against this there continues to be some pick up in confidence levels and forward expectations. How this will play out remains to be seen.”

“Staff levels have risen slightly on last year and we have seen some difficulties in finding skilled staff.”

“We are continuing to see investment being held with firms really only replacing failing equipment or bringing previously contracted work in house. There is very little investment in capacity expansion.”

“The major reasons for this are uncertainty around how the global economy will fare this year and more importantly whether the exchange rate will remain at its elevated levels in the United States and Europe. Sales to Australian consumers are pretty good right now but products that are further processed and resold from Australia to the US and Europe are feeling the same margin pressures.”

“There was an expectation that we would see some detail on economic policy from the two major political parties but largely we were disappointed by the State of the Nation speeches. Talk around shifting the top tax rate and selling assets is really just a distraction from any solid policy proposals to turn the economy around. There were some high points with Labour reiterating its commitment to reforming monetary policy and both parties promising to do more to support research and development, but these areas should be the focus.”

“Longer term investment will only come if there is an expectation of better economic conditions to come. The Government and the Reserve Bank need to do their bit by addressing imbalances in the tax system and looking to stabilise the currency.”

ENDS

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