The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during August 2011, shows total sales in July 2011 increased 13.5% (export sales increased by 16.4% with domestic sales increasing 11.2%) on July 2010.

The NZMEA survey sample this month covered NZ$439m in annualised sales, with an export content of 46%.

Net confidence rose to -22, up from the -38 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 96, up from 93 in June, the change index (capacity utilisation, staff levels, orders and inventories) went down to 99 from 102 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 103, up on June’s result of 99.75. Anything less than 100 indicates a contraction.

Constraints reported were 78% markets, 11% staff and 11% production capacity.

Staff numbers for July increased year on year by 2.8%.

“Export sales have recovered this month although continuing currency pressures will reduce returns,” says NZMEA Chief Executive John Walley. “Favourable conditions remain for those exporting to Australia and Asia driving the sales expansion.”

“The indexes and confidence measures are still a concern with the performance index in particular showing the loss of profitability and the confidence rating remaining in negative territory where it has been for six of the seven months surveyed so far this year. The number of pessimists has strong grown strongly as the no change group has contracted.”

“Overall the demand for New Zealand’s exports is holding up for the moment, but with the global outlook very uncertain this could change quickly.”

“Comments from the survey covered reduced margins due to the high New Zealand Dollar and concerns over whether demand from overseas markets will hold up. Christchurch respondents also noted that ongoing impacts from the earthquakes were upsetting staff and worrying customers.”

“With the issues in the United States and Europe it is likely that exchange rate pressures will worsen over the next few months. This will continue to threaten the viability of exports to those areas.”

“A response to the actions of other countries who seek to weaken their currencies should be a priority for the Government and the Reserve Bank. The exchange rate as it stands is a punitive tax on exporters and encourages spending overseas; hardly what is needed to rebalance the economy.”