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The September CMA Survey of Business Conditions

The September CMA Survey of Business Conditions is now available for immediate release.

Feeling better, hoping for more…

The latest Canterbury Manufacturers’ Association (CMA) Survey of Manufacturers completed during October 2006, shows total sales in September 2006 increased 4.5% (export sales down around 7.5% although domestic sales increased about 21%) on September 2005.

The CMA survey sample this month reported NZ$276m in annualised sales, with an export content of 51%.

Net confidence returned +15; up from +8 last month.

The current performance index (a combination of profitability and cash flow) is at 95 on par with last month, the change index (capacity utilisation, staff levels, orders and inventories) increased to 103 from 99 last month, and the forecast index (investment, sales, profitability and staff) dropped to 100 from 104 in August 06. Anything less than 100 indicates a contraction.

Constraints reported 8% production, 8% staff, 15% capital and markets 69%.

Staff numbers for September decreased by around 1%.

“The story of two economies continues. The domestic sector continues to fire but exports are hurting. However, as always in the manufacturing sector, it is hard to generalise as some of our members report strong activity in a number of niche export markets – marine is one particular bright spot. Others, particularly furniture manufacturers, are hurting at home competing with imports from low cost countries, and more broadly export returns are soft on the rise in the New Zealand dollar”, says Chief Executive John Walley.

“The domestic market is being buoyed by infrastructure spending coming on stream, the headlong rush to increase Government spending on staff and buildings are all pumping domestic activity and pushing inflation”.

“Although the trade balance has improved a little, the stronger New Zealand dollar has impacted returns and will slow sales. The recent RBNZ call on the OCR has helped a bit, but inflationary pressures remain and few look to the future with any certainty on cross rates.”

“Raw materials cost and lead times are increasing, some material is on allocation, all pressuring margins and growth.”

“This was a survey of mixed results as some companies are reporting more positive results and sentiment than others. Manufacturing is tough in New Zealand, if we are to improve the external trade balance the sector must grow. Government must look to policy settings that reduce domestic inflationary pressure, support the sector and take some of the ‘yo-yo’ from the currency to provide some certainty for exporters.”

ENDS

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