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Back from the holidays

Back from the holidays

Confidence improved in JANUARY despite the global storm clouds, the ever-stronger NZ dollar, falling sales and employment. Aggregate sales fell in DECEMBER 2002 when compared to DECEMBER 2001 some 4.4%. Across the board back came the optimists, the middle ground held. "People back from the holidays are more strongly optimistic than when they left. Net confidence reported in JANUARY was 24 up from 21 in our survey completed in DECEMBER," said John Walley, CEO of the Canterbury Manufacturers' Association.

Aggregate sales decreased for the month of DECEMBER 2002 by 4.4% on DECEMBER 2001, with domestic sales down by over 1.6% and export sales down by about 10%. "Our leading indicators say that investment intentions may have softened further but sales, profits and employment are expected to rise," said Walley. "This builds on trends we saw at the end of 2002."

Staff numbers have shown a decrease of 6.5% on the same period last year. There is some anecdotal feedback that order books filled late before the holidays and have a softer carryover in to 2003 that the same period in 2002. In the survey completed in JANUARY our net leading indicators, anticipated staff levels and profitability were up a little, turnover indications were down and investment intentions held at last month’s level. "Performance down, feelings up - carryover from the holidays perhaps, nevertheless sentiment is positive," said John Walley.

From the constraint standpoint, market conditions were 61% with skilled staff constraints at 11%. Capacity was cited as a constraint by the balance of our respondents.

"The surge of the Kiwi against the US and Australia dollars reducing returns and encouraging imports featured in all comments from Canterbury manufacturers. There was also some comment on softening consumer demand in the domestic market. Others commented on ever increasing compliance costs," said John Walley

"Accelerating growth on the back of the increasing confidence is the challenge. Growth must be at the top of the national agenda, increasing exchange rates make microeconomic policies aimed at developing the manufacturing sector all the more urgent," said Mr Walley "An excursion Kiwi exchange rate similar to those seen in the early 90s has the capacity to destroy in one year markets that have taken a decade to build."

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