The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during March 2016, shows total sales in February 2016 increased 64.29% (year on year export sales increased by 74.42% with domestic sales increasing 8.83%) on February 2015.

The NZMEA survey sample this month covered NZ$784m in annualised sales, with an export content of 90%.

Net confidence rose to 45, up from 12 in January.

The current performance index (a combination of profitability and cash flow) is at 106, up from 99.3 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 104, up from 97 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 107.67, up on the last result of 102.83.  Anything over 100 indicates expansion.

Constraints reported were 65% markets, 25% production capacity, 10% skilled staff and 5% capital.

A net 30% of respondents reported productivity increases for February.

Staff numbers for February increased 1.49% year on year.

Operators/labourers, tradespersons, supervisors, managers, and professional/scientists reported a moderate shortage.

“February’s sales are a stark contrast to the results in other recent months.  Year on year export sales had been in the negative since October 2015, going as low as a 25% fall last month – this month’s 74.4% year on year increase is a huge improvement. Domestic sales also bounced back from a fall into the red last month, showing an increase of 8.83% on February last year.” says NZMEA Chief Executive Dieter Adam.

“It is worth noting that the comparison month, February 2015, was a particularly low month for exports, which will have contributed to the very large relative increase this month.  The survey has also gained some large export respondents, pushing up the annual values and export increase, as well as export content of the survey – though sales remain significantly positive even when removing these.  Time will tell if this increase eventuates into a sustained positive trend.

“The improvements in sales have been supported by improvements in all our sentiment measures – with confidence rebounding to the highest reported level since May 2010.  All three index measures moved into expansion with significant improvements on January’s result.  Respondents continue to employ more staff, though the increase was at a slightly lower rate than felt in January.

“There remains pressure on the RBNZ to continue to ease, particularly with the exchange rate reaching an 8 month high recently.  While manufacturers can still have good months despite an overvalued currency, over time this weighs on manufactures and exporters, and their incentives and ability to reinvest to stay competitive.  This has been an ongoing problem for many years and across governments, and the performance of tradable activity has suffered as a result – more work is needed to hit the Governments export target.” says Dieter Adam.