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Growth plans on hold - latest survey

Media release August 25th, 2000

Growth plans on hold - latest survey

The number of Auckland's manufacturers expecting turnover and profits to pick up is slightly higher than last month, said Bruce Goldsworthy commenting on EMA's monthly poll of business conditions for July.

"Other indicators show investment and sales growth are on hold or ebbing," Mr Goldsworthy said.

"A surprise is that in spite of the weakness of the exchange rate, the number of respondents expecting to increase their prices had dropped right back to 26 per cent of the sample, from 42 per cent the previous month. This possibly reflects an extremely competitive market as margins are squeezed.

"Nevertheless the currency's impact on the cost of imported raw materials and components is the main reason for upward price pressures on locally made goods.

"Though total turnover in July was down slightly, including export receipts, these should be read across the three month trend, not just for the one month,"

"The exchange rate and industrial relations are the two factors uppermost in mind for most businesses.

"Investment intentions have slipped back, including for training, which we relate to the reported increase in spare production capacity. Only a quarter of firms say they are now operating at full capacity, a sharp fall from the 37 per cent reporting full capacity last month. This represents far more spare capacity than at any time this year.

"Staff numbers, cashflow and other indicators show an overall holding pattern at a time when we were expecting more bullish export activity."

Further comment: Bruce Goldsworthy tel 09 367 0948 (bus) 09 522 2723 (hme)

SURVEY OF BUSINESS CONDITIONS Survey of Business Conditions::: :::

JULY 2000 COMPARED WITH JULY 1999

::::::::::::Manufacturers' Division

Ref. 00/01-38 ,File A.10.3.1

:::::::::::::::22-Aug-00

:::::::::::::::::::::Last:::Prev:::Prev Prev:::Prev:::Prev

:::::::::::::::::::::Mth:::Mth:::Mth::: Mth:::Mth:::Mth

TOTAL TURNOVER::::::Export:::36%:::Domestic:::64%::: June:::May:::April:::Mar:::Feb:::Jan

::::::Increased :::-4%::::::::::::11%:::12%::: -13%:::21%:::8%:::10% :::

DOMESTIC TURNOVER::::::Domestic turnover increased by ::::::-3%::: 9%:::2%:::-13%:::19%:::7%:::6% :::

EXPORT TURNOVER::::::Export turnover increased by ::::::-6%::: 20%:::27%:::-13%:::23%:::9%:::17% :::

EMPLOYMENT

:::

STAFF NUMBERS::::::Staff numbers decreased by ::::::0%:::-3%::: -1%:::1%:::0:::-1%:::-1% :::

% of respondents staffing requirements for next month::::::Increase::: 4%:::8%:::7%:::8%:::14%:::22%:::11%

:::::::::::::::No Change:::81%:::79%:::78%::: 75%:::86%:::78%:::81%

:::::::::::::::Decrease:::15%:::13%:::15%::: 17%:::0%:::0%:::7% :::

% of respondents having difficulties recuiting staff::::::Skilled:::47%::: 38%:::31%:::44%:::60%:::56%:::45%

:::::::::::::::Unskilled:::24%:::25%:::19%::: 31%:::20%:::25%:::27%

:::::::::::::::Man/Prof:::29%:::38%:::50%::: 25%:::20%:::19%:::27% :::

CASH FLOW

:::

% of respondents who reported an improvement::::::Improve:::19%:::29%::: 27%:::20%:::27%:::22%:::33%

% of respondents who reported no change:::::::::Same:::52%::: 42%:::58%:::48%:::68%:::37%:::48%

% of respondents who reported a worse position::::::Worse:::30%::: 29%:::15%:::32%:::5%:::41%:::19% :::

INVESTMENT

:::

% of respondents who would invest in equipment::::::Equipment::: Yes:::48%:::63%:::46%:::88%:::68%:::63%:::63%

% of respondents who said they would not invest in equipment:::Equipment No::: 52%:::38%:::54%:::12%:::32%:::37%:::37%

% of respondents who would invest in building work::::::Building Yes::: 15%:::25%:::19%:::20%:::18%:::19%:::19%

% of respondents who said they would not invest in building work::: Building No:::85%:::75%:::81%:::80%:::82%:::81%:::81%

% of respondents who would invest in training:::::::::Training Yes::: 59%:::71%:::67%:::80%:::86%:::74%:::74%

% of respondents who said they would not invest in training::: Training No:::41%:::29%:::33%:::20%:::14%:::26%:::26% :::

BUSINESS CONFIDENCE

:::

% of respondents you are confident turnover will improve::: Improve:::26%:::29%:::15%:::28%:::14%:::22%:::48%

% of respondents you see turnover remaing the same::::::Same:::59%::: 42%:::48%:::56%:::71%:::63%:::52%

% of respondents you see turnover worse:::::::::Worse:::15%::: 29%:::37%:::16%:::14%:::15%:::0%

% of respondents you are confident profitability will improve:::Improve:::30%::: 21%:::11%:::16%:::15%:::26%:::48%

% of respondents you see profitability remaing the same::::::Same::: 41%:::50%:::52%:::60%:::70%:::56%:::44%

% of respondents you see profitability worse:::::::::Worse:::30%::: 29%:::37%:::24%:::15%:::19%:::7% :::

CAPACITY

:::

% of respondents who are at full capacity:::::::::Full:::25%::: 37%:::38%:::41%:::53%:::43%:::46%

% of respondents who are below capacity:::::::::Below:::75%::: 63%:::63%:::59%:::47%:::57%:::54%

Average Utilisation::: 69%:::65%:::67%:::74%:::74%:::76%:::75% :::

PRICES/COSTS

:::

% of respondents who are expected to increase prices::::::Increase::: 26%:::42%:::37%:::48%:::30%:::31%:::19%

% of respondents who expect prices to remain the same::::::Same:::74%::: 58%:::63%:::52%:::70%:::65%:::78%

% of respondents who expect to decrease prices::::::Decrease::: 0%:::0%:::0%:::0%:::0%:::4%:::4% :::

% of respondents who are rising prices because of :Wage Settlements::: 10%:::12%:::12%:::11%:::14%:::10%:::11%

::::::::::::R.M.Costs::::::54%:::59%:::52%::: 56%:::71%:::53%:::63%

::::::::::::Finance Costs:::7%:::15%:::18%:::14%::: 5%:::10%:::11%

::::::::::::ACC::::::17%:::9%:::12%:::8%::: 10%:::13%:::5%

::::::::::::Other::::::12%:::6%:::6%:::11%::: 0%:::13%:::11% :::

EXTERNAL FACTORS

:::

% of respondents who were concerned with the following:Interest Rates::: 11%:::16%:::15%:::14%:::13%:::14%:::11%

::::::::: Business Rates::::::2%:::2%::: 4%:::2%:::0%:::2%:::0%

::::::::: Competition::::::11%:::11%::: 10%:::14%:::16%:::18%:::20%

::::::::: Industrial Relations:::22%:::28%::: 25%:::19%:::24%:::14%:::9%

::::::::: Exchange Rates::::::23%:::23%::: 26%:::28%:::29%:::30%:::31%

::::::::: Inflation::::::11%:::9%::: 7%:::9%:::8%:::2%:::7%

::::::::: Taxation::::::9%:::4%:::6%::: 5%:::5%:::9%:::4%

::::::::: Cash Availability::::::11%::: 9%:::6%:::9%:::5%:::9%:::16%

::::::::: Other::::::0%:::0%:::1%::: 0%:::0%:::2%:::2% :::

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