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Investment trend up but business conditions falter

Media Release May 6, 2001

Investment trend up but business conditions falter

The Employers & Manufacturers Association Survey of Business Conditions prevailing in the north for March confirms other recent indicators that the outlook for both sales and profit has slipped back markedly over the previous month, though new investment is now being brought on line.

"Our latest survey shows a net 10 per cent of respondents see turnover still improving but this figure has halved since the previous month," said Bruce Goldsworthy, Director of EMA's Manufacturing Division.

"The number expecting profitability to deteriorate has swung sharply into a net 10 per cent negative from a net positive of eight per cent the previous month.

"Running counter to that trend is a significant increase in firms intending to invest in new equipment and skills training.

"The jump up in investment intentions is a drought breaking 30 per cent - this is most welcome as the signs of spending on new equipment and plant have been few and far between for many months.

"The investment is being bolstered by a surge of new interest in staff training, up 15 per cent over the previous month, and even in new building work.

"Our explanation is that many businesses are looking to boost productivity as well as capacity since market competition is cited as the second most critical factor, after the exchange rate.

"The investment signals are particularly interesting as capacity utilisation has wilted - it was 64 per cent for the month compared to 70 to72 per cent earlier in the year.

"Overall, turnover on the domestic market rose six per cent while export sales declined by six per cent. Staff requirements are stable.

"The number of companies expecting to increase prices has risen strongly - 20 per cent of the survey now whereas for the previous month the figure was 12 per cent. Respondents are mainly blaming higher wage settlements and increasing raw material costs."

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

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