Domestic sales recovering, exports constrained
6 November 2009
Domestic sales recovering, but dollar constrains exports
The latest New Zealand Manufacturers and Exporters Association (NZMEA) survey of Manufacturers and Exporters completed during October 2009, shows total sales in September 2009 decreased 9% (export sales decreased by 35% with domestic sales increasing 18%) on September 2008.
The NZMEA survey sample this month covered NZ$373m in annualised sales, with an export content of 38%.
Net confidence rose to -17, up from the -27 result reported last month.
The current performance index (a combination of profitability and cash flow) is at 98, up from the previous month’s 96, the change index (capacity utilisation, staff levels, orders and inventories) fell to 95 down from 101 last month, and the forecast index (investment, sales, profitability and staff) is at 98.5, up on the previous month’s result of 97.25. Anything less than 100 indicates a contraction.
Markets were the only reported constraint.
Staff numbers for September decreased year on year by 21%.
“A rebound in retail sales and housing consents has meant that any manufacturers supplying those markets have seen sales pick up in the last month; it is worth noting that even in the domestic economy sales are sporadic. Exporters are continuing to struggle with the high dollar,” says NZMEA Chief Executive John Walley.
“Firms such as Bridgestone moving offshore and others downsizing shows that a recovery in the real economy is not yet with us.”
“Manufacturers and exporters remain sceptical of returns from investment, so most remain on hold at this point. The talk of a ‘W’ shaped recovery with another down period in prospect, as opposed to sustained recovery, is sufficient to keep most firms wary. The unpredictable direction of the dollar is possibly the key inhibitor for investment.”
“There needs to be some quick and decisive action on the dollar as this would be the major driver of a locally exaggerated downturn. Efforts to lower the currency in the short-term and to stabilise it over the long-term are vital. Treasury’s Long-term Fiscal Statement demonstrates that urgent work is needed to lift our output if we are to maintain our living standards. A stable currency is a precursor to any sustainable real economy recovery, so a solution to this volatility is a vital part of the policy framework needed to lift productivity.”