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Not a Good April

1 June 2006
IMMEDIATE RELEASE
Not a Good April

The latest Canterbury Manufacturers’ Association (CMA) Survey of Manufacturers completed during May 2006, shows total sales in April 2006 were down 10% (export sales down just under 16% and domestic sales down around 3.5%) on April 2005.

The CMA survey sample this month reported around NZ$400m in annualised sales, with a 51% export content.

“As we mentioned last month, April was disrupted with Easter and other holidays, and this has followed through in the numbers for April,” says John Walley, Chief Executive of the CMA. “For some it was a bit of a tough one, a five week pay month with only 16 working days.”

“The New Zealand dollar has held the gains since the March fall but rates are more comfortable on the key Australian dollar and the Euro. The US dollar is tough, but not as difficult as it was.”

“Increasingly the resurgence of world metal price is showing in comments from members. Copper and aluminium, in particular, are seeing record highs on the London Metal Exchange. This is placing significant price pressure in channels made up of these commodities. Speculators are very active in these markets.”

“Significant price pressures are building across many disparate materials, many are being passed on directly; some customers not accepting price rises are not being supplied.”

“Some respondents supply ‘early indicator’ products (those used early on in other cycles), these are indicating a significant domestic slow down in sales.”

“Concerns continue to be expressed around the level of wage demands; affordability in the context of company performance is the major issue in this regard.”

“All up, the results and confidence were expected to be better. The fact that the out turn was low confidence, coupled with poor results and early indications that things will get worse – make it difficult to be optimistic.”

“The immediate pressure is off electricity prices and off exchange rates, but the competitive and productivity issues run deeper and they are not just going to evaporate.”

Net confidence dropped to -29 from -23 last month, probably off-the-back of the results from a disrupted April.

The current performance index (a combination of profitability and cash flow) remains at 94 down from 99 last month, the change index (capacity utilisation, staff levels, orders and inventories) remained at 98, the forecast index (investment, sales, profitability and staff) remained at 99. Anything less than 100 indicates a contraction.

Constraints focused only on markets (93%) and capital (7%). Staff numbers continued to fall at just over 11%.

ENDS

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