The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during September 2010, shows total sales in August 2010 increased 20% (export sales increased by 37% with domestic sales increasing 13%) on August 2009.

The NZMEA survey sample covered NZ$493m in annualised sales, with an export content of 36%.Net confidence rose to 40, up from 30 last month.

The current performance index (a combination of profitability and cash flow) is at 107.5, up from 103.5 in July, the change index (capacity utilisation, staff levels, orders and inventories) went down to 100 from 101 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 104.75, down on July’s result of 105.5. Anything less than 100 indicates a contraction.

Constraints reported were 80% markets, 10% capital and 10% skilled staff.
Staff numbers for August increased year on year by 7%.

“August has shown a great improvement in export sales. Again it is not across the board, but the last couple of survey results have been very encouraging. It is worth noting that several manufacturers who had particularly weak results at this time last year have had a very strong month this year, perhaps overstating the sales growth result,” says NZMEA Chief Executive John Walley.

“Growth is largely from manufacturers exporting to Australia and Asia where growth has continued despite the global recession. Those exporting to the United States and Europe are having a hard time with volume and margin.”

“We have seen terrible numbers from manufacturing in the June quarter GDP statistics so it is pleasing to see more up to date figures showing some improvement since then. Confidence and index numbers have remained in positive territory.”

“Staff numbers have grown for the fourth successive month.”While the numbers have been improving over the last couple of months, the message from firms was that this growth was occurring despite poor export conditions. A high dollar, low returns and the persistent presence of fiscal disincentives to invest in productive activity were mentioned as limiting factors. Business investment in the tradeable sector will suffer while a volatile dollar prevents exporters from accurately forecasting returns and support available for productive investment in other jurisdictions is not replicated here. The removal of these competitive disadvantages is long overdue.

‘The growing Balance of Payments deficit reported last week was very concerning. It indicates that the rebalancing towards export growth is not occurring at a fast enough rate, if at all.”

“Measures to encourage investment in export industries are a must if the Government is serious about the rebalancing process.”

-The New Zealand Manufacturers and Exporters Association