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Food for Thought

Food for Thought

The Canterbury Manufacturers’ Association Survey of Manufacturers completed during August 2004 shows overall sales in July 2004 were up over 6%, domestic sales increased by 14%, and export sales fell by just under 4% compared to July 2004.

“Confidence took a big hit, the buoyant domestic economy held up sales overall but the fall in export sales is beginning to form a trend. Fears of yet more pressure on the Australia exchange rate has manufacturers worried,” said John Walley, Chief Executive of the Canterbury Manufacturers’ Association. “Staff numbers are again down slightly.” “The majority of respondents are reporting domestic and export sales improvements. Only in the staffing area are those reporting a rise in the minority.”

“As the irrepressible domestic economy places pressure to tighten, further fears are growing of even higher exchange rates on the Australian dollar. This really hurts our manufacturers as return shrinks on Australian sales.”

“If manufacturers cut and run from export markets we can anticipate deep structural problems later on as the external deficit continues to balloon. One way or another, our external deficit of around 100% of GDP will require correction.”

“We have more and more reports from manufacturers of significant and sustained raw material cost increases.”

“Net confidence dropped to 12 down from 50 last month. It is hard to say what has driven this change but the feeling is that the fears on the Australian exchange rate in the wake of yet more tightening from the RBNZ could be the source of the shift in sentiment.”

“Staff numbers showed a decrease of under 0.5%, finding staff continues to be a little easier.”

All the leading indicators weakened in this survey. Around 59% of respondents indicated market conditions as the major constraint; finding staff a problem for 18%, and capacity an issue for 24%. Capital was not mentioned as a constraint.

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