Business News

The Employers and Manufacturers Association has joined the call for an early cut to interest rates. According to the EMA the Reserve Bank should reduce the Official Cash Rate right away or risk deflation next year when the economy is predicted to slow. “A year ago we said interest rates did not have to be raised this year and that has proved correct,” said Kim Campbell, EMA’s chief executive. “We are concerned the Reserve Bank has paid too much attention to domestic house price rises in Auckland and Christchurch and not enough to the rapid changes in global markets. “Inflation during the year has scarcely tested the bottom end of the Bank’s 1 to 3 per cent inflation target. “Now inflation is falling further as the costs of producing the $50 billion worth of goods we import decline due to the collapse internationally of the price of oil, steel and other commodities. “The price of oil especially, which has reduced by at least 30 per cent, is slashing the costs of production and freight worldwide; this is not being adequately factored into domestic inflation forecasts. “The recovery from the GFC has not been accompanied by inflationary pressures driven by rising demand as has been the case in previous economic cycles. “This time our fortunes have depended on different vectors than hitherto. “New Zealand has to a large degree decoupled from the US and Europe where there has yet to be a sustained recovery. Asia and Australia are far more significant to us. “But helped by higher than necessary interest costs, the cross rates with the US and Australia have remained unduly high which has shredded margins, particularly on our $10 billion export trans Tasman trade. “In addition, the cost of borrowing internationally is at historically low levels while a global […]

Editorial– November issue NZ Manufacturer www.nzmanufacturer.co.nz Security and climate change overshadowed G20 talks on boosting global economic growth at the summit, although the leaders did sign off on a package of measures to add an extra 2.1 percentage points to global growth over five years. In this ever-changing world, New Zealand will benefit from the decisions reached, although to be fair, maybe not in the way the decisions have been arrived at. The benefits we need to focus on directly include manufacturing, thanks to global economic integration which has made possible the continuous re-orchestration and relocation of production into new forms of value reaction and innovation. Make no mistake; innovation in manufacturing will come from many corners of the world by emerging economies that are coming to grips with new manufacturing processes and technologies. And we better be ready! Globalisation shapes manufacturing and its technologies. The emerging economies – think Brazil,a BRIC member, think Myanmar – will be right up there and offering really competitive products at really competitive prices. So do more New Zealand companies set up shop in Asia, for example, to be as competitive as the locals? And think about this; it isn’t that many years ago that ‘The Circular Economy’, ’The Internet of Things (IoT)’, ‘The Future of Manufacturing’, ‘Manufacturing Technology’, ’Additive Manufacturing’ and ‘Bioengineering’ were part of some futuristic thinking, problematical to deal with and a little too far away to even consider. Cute little buzz words when all we wanted to talk about was 3 axis machining! It’s like the issue of climate change…it’ll never, ever happen; we’ll never see the ice melt or have the hottest year on earth as was recorded last year As a country we manufacture some terrific things. As long as our technologies, price structuring, equipment and skills are […]

New Zealand expects to benefit from commitments secured at the G20 Leaders’ Summit, from the world’s 20 biggest economies, to lift economic growth by an extra 2.1 percent by 2018. In a communique released at the end of the weekend summit in Brisbane, the G20 group, made up of countries which represent 85 percent of global economic activity and 75 percent of global trade, said it had commitments from member countries to deliver an extra 2.1 percent of GDP by 2018. “New Zealand, whilst a physical island isn’t an economic island. To the extent that that’s good for the global growth, it will be good for New Zealand” because it will enhance our ability to export to those markets, said Mark Adamson, who is chief executive of Fletcher Building, New Zealand’s largest listed company, and the nation’s representative on the B20 business group. “I see a lot of positive likely to come out of the communique.” The G20 commitments are slated to add US$2 trillion to the global economy and create millions of jobs as the countries focus on improving infrastructure and bolstering investment, trade and competition. New Zealand, which was invited to the G20 this year as a special guest of the Australian host, expects to benefit from a pick up in growth in the rest of the world. “We’ve submitted a plan which is consistent with existing government policy and with existing growth forecasts so our plan won’t be adding a lot to global growth, for a developed country we are already doing our bit,” Finance Minister Bill English told reporters on the sidelines of the meeting. “The New Zealand economy is travelling pretty well relative to most of these other economies and so there aren’t big obvious steps that New Zealand could take to add that much […]

 The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during October 2014, shows total sales in September 2014 decreased 4.08% (year on year export sales increased by 13.54% with domestic sales decreasing 10.11%) on September 2013. The NZMEA survey sample this month covered NZ$728m in annualised sales, with an export content of 30%. Net confidence was at 32, up from 27 in our survey last month. The current performance index (a combination of profitability and cash flow) is at 94.3, down from 97.3 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 106, up from 103 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 108.67, up on the last result of 106.67. Anything less than 100 indicates a contraction. Constraints reported were 59% markets, 18% skilled staff, 14% capital and 9% production capacity. Net 14% of firms reported a modest rise in productivity for September. Staff numbers for September increased year on year by 2.14%. Tradespersons, supervisors, managers and operators/labourers reported a moderate shortage, while professional/scientists reported a minor shortage. “This month’s results once again follow the trend for most of 2014: improving year on year export sales, with decreasing domestic sales,” says NZMEA Chief Executive John Walley. “Confidence improved slightly on last month, while indexes were mixed. This month saw the market constraint measure bounce back from 47% in August, to 59% in September, reflecting continued soft domestic markets and uncertainty around the currency.” “Recent trends in our index measures have shown the performance index, which takes into account profitability and cash-flow, has consistently been in negative territory during 2014. In contrast, the forecast index, which measures expectations around investment, sales, staff, profit and wages, has remained positive through 2014, as has the […]

ExportNZ says today’s announcement that New Zealand has the green light to enter the World Trade Organisation’s (WTO) Agreement on Government Procurement (GPA) is a great opportunity for Kiwi exporters. It congratulates the Government on such a positive result following two years of negotiations, and looks forward to seeing New Zealand’s accession to the Agreement. Catherine Beard, Executive Director of ExportNZ says, “Entering this Agreement will open up opportunities all over the world for Kiwi firms, reducing costs and putting businesses on a more equal footing. “International businesses can already compete for New Zealand government contracts as we’re such an open trading nation, but with this Agreement in place this type of open access will be reciprocated. Kiwi firms will be able to bid for foreign government contracts, worth US $1.7 trillion a year and growing, from right here in New Zealand. “This is a huge opportunity for Kiwi firms currently participating in these foreign supply chains. Now is the time for those and other businesses to also think about raising their capabilities to be ready and able to compete in those big overseas tenders.”

The manufacturing sector experienced its fourth consecutive increase in expansion levels during September, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for September was 58.1 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 1.1 points higher than August, and the second highest result recorded so far for 2014. BusinessNZ’s executive director for manufacturing Catherine Beard said that the continued upwards track of the overall result was encouraging for the sector. “Although the start of 2014 produced some healthy expansion results, activity levels recorded during the middle of the year were at a more moderate pace. The fact that the last two months have shown strong growth bodes well for the manufacturing sector as we enter the last quarter of the year.” BNZ Senior Economist Craig Ebert said “A falling trend in the NZ dollar will help manufacturers’ export revenue but will also create pressure on import costs and the servicing of any unhedged foreign-currency debt.” All five seasonally adjusted main diffusion indices were in expansion during September. Deliveries (62.4) led the way, with its highest result since July 2013. New orders (60.0) rose 1.5 points, while production (59.3) dropped 1 point, although still showing very healthy levels of activity. Finished stocks (58.1) recorded its highest value since the survey began in 2002, while employment (56.0) rose another 2.0 points. All four regions were in expansion during September. In the North Island, the Northern region (58.9) decreased 1.7 points after a large increase in expansion during August. The Central region (53.5) recovered from consecutive months in contraction to record its highest value since May. In the South Island, the Canterbury/Westland region (55.9) rose 1.2 points, while the Otago-Southland region (65.4) continued its […]

New Zealand employment confidence rose to a six-year high in the September quarter as sentiment in Canterbury bolstered the nation’s outlook on jobs, according to the latest Westpac McDermott Miller Employment Confidence Index survey. The index rose to 111.5 in the September quarter from 109.9 in the June quarter, in a measure were a number above 100 indicates optimists outweigh pessimists. The index has risen for seven consecutive quarters and is now at its highest level since September 2008, when the global financial crisis began to weigh on sentiment. It remains below its peak of 135.9 in September 2007. New Zealand’s unemployment rate fell to a five-year low 5.6 percent in the June quarter as employment growth in Canterbury fuelled the labour market. Meanwhile, businesses intended to hire more staff according to ANZ Bank’s latest business outlook survey for September, with a net 21.3 percent of businesses intending to employ more people, from August’s 18 percent. Business and consumer confidence measures have fallen in recent months on concerns the pace of economic growth is slowing, as falling dairy and log prices, the country’s largest and third largest exports respectively, and the historic strength of the New Zealand dollar weighs on export receipts. “The rise in employment confidence might seem to go against the recent run of play, with business and consumer confidence surveys falling over the September quarter,” said Michael Gordon, Westpac senior economist. “However, we don’t see these messages as contradictory. The labour market typically lags the broader economic cycle, and it is only in the last year or so that we’ve seen a marked lift in employment growth.” Employment confidence rose in eight out of 11 regions, and Canterbury returned to the position of most confident region after being overtaken last quarter by Auckland. The area is in […]