The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during October 2012, shows total sales in September 2012 increased 3.07% (export sales increased by 38% with domestic sales decreasing 18%) on September 2011.
The NZMEA survey sample this month covered NZ$384m in annualised sales, with an export content of 50%.
Net confidence fell from -10 last month to -33 this month.
The current performance index (a combination of profitability and cash flow) is at 98, down from 102 in August, the change index (capacity utilisation, staff levels, orders and inventories) went down to 98 from 101 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 96, down on August’s result of 100. Anything less than 100 indicates a contraction.
Constraints reported were 89% markets and 11% skilled staff.
Staff numbers for September increased year on year by 1.7%.
“You would think with strong growth in exports year on year we would be seeing sentiment follow, but as always sales are vanity, profits are sanity – and of course profitability is ruined by the exchange rate,” says NZMEA Chief Executive John Walley.
“The first OCR review by the new Reserve Bank Governor produced much of the same; an overblown view of inflation pressure of the back of growth in the domestic sector. We have seen all this before.”
“Meanwhile the Government is in denial of the problems facing the manufacturing sector; in denial of the policy options being used elsewhere, even claiming they don’t work when they are manifestly successful.”
“This comes down to culture, if you have a do nothing mind-set doing anything is always going to be a bit too hard and you would need to think.”
“Consider the Swiss decision to impose a limit on the rise of the Swiss Franc against the Euro. That decision is not made in siloed isolation; it is a political choice that is pro-jobs in the Swiss export sector and against cheap imports for everyone in Switzerland.”
“In a world of such interventions New Zealand policy makers need to wake up and respond,” said Walley.