The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during September 2012, shows total sales in August 2012 decreased 2.75% (export sales increased by 10% with domestic sales decreasing 12.9%) on August 2011.

The NZMEA survey sample this month covered NZ$580m in annualised sales, with an export content of 50%.

Net confidence remained about level moving from -11 last month to -10 this month.

The current performance index (a combination of profitability and cash flow) is at 102, down from 104.5 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 101, down on July’s result of 103. Anything less than 100 indicates a contraction.

Constraints reported were 90% markets and 10% skilled staff.

Staff numbers for August increased year on year by 2.4%.

“We have seen the impact of long run problems in the economy over the past couple of months,” says NZMEA Chief Executive John Walley (pictured). “We have seen some firms reach a tipping point due to the continued affects of a high NZ Dollar.”

“At a wider level the general theme of comments is that while many firms are able to tread water with the currency this high there are very few investing in future development. This will be a longer term slow growth or contraction story.”

“Sales continued to bounce around in August with export sales increasing year on year and domestic sales falling. With conditions remaining poor for manufacturing exporters this low to zero growth and volatility is expected by many to continue for the foreseeable future.”

“Index numbers were down on last month but an increase in staff numbers is a welcome positive.”

“Respondents to the survey were concerned about the possibility of further deterioration in world markets and the impact of lower sales, in combination with small margins. Deterioration in the Australian economy, their cut in the base rate, and further movement in the Australian dollar cross rate with the New Zealand Dollar is of particular concern. Remember Australia has for the most part been good for exporters to date.”

“While our international competitors take steps to support their export industries, largely through currency devaluation, and as long as our politicians continue to deny the obvious, our export decline will continue.”

“The response from the Government to the loss of export jobs demonstrates their short term view that cheap imports matter more than the success of the export sector. This approach is causing New Zealand’s current account deficit to grow and threatens economic growth and job prospects in the longer term.”

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.