No change despite “overvalued” dollar
The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during January 2013, shows total sales in December 2012 decreased 5.35% (export sales decreased by 3.83% with domestic sales decreasing 6.62%) on December 2011. The NZMEA survey sample this month covered NZ$556m in annualised sales, with an export content of 46%. Net confidence fell to -14, down from the result reported last month. The current performance index (a combination of profitability and cash flow) is at 101, down from 104.5 in November, the change index (capacity utilisation, staff levels, orders and inventories) went down to 97 from 102 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 101.75, down on November’s result of 104. Anything less than 100 indicates a contraction. Constraints reported were 86% markets, 7% skilled staff and 7% production. Staff numbers for December increased year on year by 1.89%. “2012 ended on a negative note, both domestic and export sales fell year on year,” says NZMEA Chief Executive John Walley. “Confidence fell, after a bit of a recovery in November. This is largely due the ever higher exchange rate. At the same time we see decreases on our composite indexes.” “There is not really a lot of good news about at the moment, markets are soft and margins are squeezed by the exchange rate.” “The Reserve Bank yet again chose to keep interest rates at 2.5%, despite the recognition that the dollar is overvalued. This is disappointing, as the recent low inflationary pressures have left room for a cut to boost growth and counteract some of the exchange rate appreciation. Their main concern, as always, was a house price bubble, but bereft of any supplementary instruments interest rates cannot do it all. Mutterings from the RBNZ on […]