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Confidence Continues To Decline For Manufacturers

17 July 2000
BUSINESS CONFIDENCE CONTINUES TO DECLINE FOR MANUFACTURERS

“Despite a good March Quarter, manufacturers’ expectations about the future have continued their decline for the fifth quarter”, said David Moloney President of the New Zealand Manufacturers Federation.

While not totally unexpected given business concern over the possible outcomes of some Government policies, a decline of 45% has been exacerbated by rising input costs and an inability to pass on prices increases, particularly in domestic and Australian markets. The weakness of the dollar and rising oil prices are the main contributing factors to these cost increases. The impact of these factors had not been fully felt in the March Quarter.

“The principal indicators for the sector over the next three months are all negative with investment intentions down, along with employment prospects and, for the first time since December 1998, profit expectations. Domestic activity which accounts for two thirds of all manufacturing sales was down in the June quarter, with a net 12% of manufacturers expecting domestic sales to fall in the September quarter. Export growth is expected to continue given the weak $NZ but will not be enough to offset the fall in domestic sales.

“If things continue along the present path there is a possibility of the sector moving into a recession later this year.

“Some of the factors contributing to the present situation are clearly beyond our control, such as the strength of the US$. But further interest rate increases, or policies which increase employment and other costs of doing business are not helpful.”

For further comment contact:

David Moloney 04 388 8355 (bus)
Peter Crawford 04 473-3000 (bus)

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