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NZMEA Survey: Sales up, sentiment mixed

Sales up, sentiment mixed - 6 June

For results tables and historical data click here.

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during May 2014, shows total sales in April 2014 increased 4.93% (year on year export sales increased by 12.83% with domestic sales decreasing 1.71%) on April 2013.

The NZMEA survey sample this month covered NZ$440m in annualised sales, with an export content of 49%.

Net confidence was at 16, up on March’s result of 0.

The current performance index (a combination of profitability and cash flow) is at 87.7, down from 101.7 in March, the change index (capacity utilisation, staff levels, orders and inventories) was at 98, down from 101 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 105.17, up on March’s result of 104. Anything less than 100 indicates a contraction.

Constraints reported were 68% markets, 21% production capacity and 11% skilled staff.

Net 26% of firms reported a modest fall in productivity for April.

Staff numbers for April increased year on year by 2.08%.

All staff segments, tradespersons, operators/labourers/ supervisors, managers and professional/scientists, reported a moderate shortage for April.

“We again see year on year domestic sales decreasing, while export sales improved off a low base a year ago. Confidence recovered slightly back up to 16 from 0, while performance and change indexes indicate contraction. Staff numbers stayed with the small positive trend,” says NZMEA Chief Executive John Walley.

“The high exchange rate featured in many comments, and the pressure is evident by the market constraint increasing to 68% from 53% last survey, as well as the large fall in the performance index, which takes into account profitability, cash flow and the effect of the exchange rate on margins. The cross rate with Australia received special mention by many, cutting margins and increasing competition. The longer this continues, the greater will be the negative impact on future investment, innovation and competitiveness of manufacturers. Recent comments by the Reserve Bank of New Zealand suggested they would intervene if the right opportunity arose, although this has yet to eventuate.”

“The 2014 Budget was much as expected and offered little for the traded sector, other than some modest increasing in funding in certain areas, such as NZTE. The focus stayed on reaching Government surplus, rather than any particular effort aimed at correcting our negative external balance.”

“To this point the tradable sector has seen initiatives from Labour in regard to specific policy and more generally a revised Policy Targets Agreement that would add the external balance in conjunction with inflation as policy targets. We hope to see much more debate in these areas prior to the election.”

The New Zealand Manufacturers and Exporters Association survey gathers results from members around New Zealand. It provides a monthly snapshot of manufacturers and exporters’ sales and sentiment.

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