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Confidence Improves but Fragile

MEDIA RELEASE
31 May 2002 Confidence Improves but Fragile

Confidence rebounded in our MAY survey of manufacturers. Our APRIL survey was very pessimistic with net confidence dropping to net +7%, MAY results have bounced back to a net +29% driven from sales being achieved by exporters. The financial results from APRIL have seen a strong bounce back in export sales growth, the domestic sectors continues to be weak for manufacturers. "Confidence right now is fragile, with many references to exchange and interest rate impacts." commented John Walley, CEO Canterbury Manufacturers' Association. “Overall sales on last year fell around 1.5%, domestic sales back around 15.5% with Exports up some 24%.”

Staff numbers increased around 2% year on year. In MARCH all our future indicators – staff, investment, profitability and sales - turned sharply negative. In the APRIL numbers only turnover maintained that negative track. "I think this further underpins the interpretation of uncertainty amongst Canterbury manufacturers" said Walley.

Manufacturers continue to identify market conditions as the principle constraint to growth. The market is identified five times more often than the next constraint of productive capacity; staff shortages are identified as a constraint by less than 10% of respondents and capital is not signalled as a problem.

“Export sales bounced back strongly, supporting the improvement in confidence but most of the surveys would have been completed prior to the strong appreciation of the NZ dollar. Comments are coming back that suggest confidence is much more fragile and it would not take much to see the optimists fall away - a drop in export sales and profitability - on the back of an appreciating dollar or negative news at home could just do it." commented John Walley.

“"Overall the confidence is there, but it could go either way from this point." said Walley.

ENDS

CANTERBURY MANUFACTURERS' ASSOCIATION
Survey of Business Conditions
APRIL 2001 compared with APRIL 2002

SAMPLE SIZE: As the Survey respondents represent approximately 17 percent of manufacturing employment and a similar percentage of local production, this indicates trends in Manufacturing in Canterbury

CHANGE OVER 12 MONTH PERIOD
(The table below represents the above returns expressed as percentages)
Apr Mar
TOTAL TURNOVER: Export /Domestic ratio 44/56 52/48
% Change in Total Turnover DECREASED -1.48 -14.06

DOMESTIC TURNOVER: % of respondents reporting a rise 53 45
% of respondents reporting a fall 46 36
% of respondents reporting no change 0 18
% Change in Ave Domestic Turnover DECREASED -15.4 -9.43

EXPORT TURNOVER: % of exporters reporting a rise 60 22
% of exporters reporting a fall 30 77
% of exporters reporting no change 10 0
% Change in Average Export Turnover INCREASED 24 -17.88

STAFF NUMBERS: % of respondents reporting a rise 46 50
% of respondents reporting a fall 23 20
% of respondents reporting no change 30 30
% Change in Average Staff Numbers INCREASED 2.16 3.91

CHANGE OVER 12 MONTH PERIOD
(The table below represents the above returns expressed as percentages. Last month in brackets.)

Large Fall
(Over 15%) Modest Fall
(2.5%-15%) No Change
(Within 2.5%) Modest Rise
(2.5%-15%) Large Rise
(Over 15%)
Profitability 21 (7) 14 (29) 14 (21) 29 (29) 21 (14)
Cashflow 0 (0) 14 (36) 29 (43) 36 (7) 21 (14)
Exchange Rate 0 (14) 21 (21) 43 (50) 36 (14) 0 (0)
Investment Plans 7 (14) 14 (7) 21 (29) 36 (43) 21 (7)
Sales Forecast 0 (7) 14 (7) 36 (21) 43 (57) 7 (7)
Profit Forecast 0 (7) 29 (14) 21 (43) 43 (29) 7 (7)
Staffing Levels 0 (0) 21 (29) 43 (43) 36 (29) 0 (0)
Confidence Very
Negative
7 (0) Negative

7 (21) Neutral

43 (50) Positive

36 (21) Very
Positive
7 (7)
Constraint Production
15 (14) Skilled Staff
8 (7) Capital
0 (0) Market
77 (79)


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