Business News

The world is looking a little brighter for Kiwis compared to three or four years ago, as a flow-on effect of the consistent upswing in manufacturing and service industries, said Employers and Manufacturers Association manager of advocacy, Bruce Goldsworthy. Growth in business (even at small levels) has the positive effects of secure and increased employment and the availability of goods and services to improve people’s lives. Furthermore, this means more tax is paid, and Government services also become more certain.  Mr Goldsworthy says, “We have been cautiously watching the results of our own monthly surveys of member organisations in both manufacturing and services, as well as different bank surveys of business confidence and retail spending.  “We can now say the trend for the past six months shows the previous volatility has settled down and we see some consistent improvement. Based on these results, we can look forward to modest and continued growth. “We really need to look at how we are doing in relation to manufacturing in other parts of the world, as a major factor in our own situation is the level of global demand and supply. The most recent BNZ-BusinessNZ Performance of Manufacturing Index (PMI) statistics suggest that compared to our compatriots in other major manufacturing countries we are holding up pretty well.” For example, the PMI for April in the USA was 51.3, Japan 50.4, the Eurozone 46.8, Australia 36.7 and New Zealand 54.5.  When the Index is above 50 points it shows survey participants are in expansion, and below 50, that their orders, employment levels and other measures of activity are declining.  “Another encouraging signal from the April PMI was that the index for new orders stood at 59.4, well into positive territory,” Mr Goldsworthy says. Likewise in the April BNZ-BusinessNZ Performance of Services Index (PSI), […]

Service sector expansion for April built on the solid performance of the previous two months, according to the BNZ – BusinessNZ Performance of Services Index (PSI). The PSI for April was 56.1. This was up 0.5 points from both March and February (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared to previous April results, the 2013 value was the highest since the survey began in 2007. BusinessNZ chief executive Phil O’Reilly said that in the context of the survey’s time series, the strong April result contributed to the strongest three month result since the last quarter of 2007. “Unlike previous times where one or two months of solid expansion were followed by a drop in expansion or even contraction in the sector, the April result kicked on with stronger growth. Despite the slight dip in the number of positive comments (60% in April compared with 65% in March), there were numerous comments about the continued good weather providing on-going business activity, which helped boost the overall result.  BNZ senior economist Craig Ebert says, “The latest PSI echoes many of the features of the PMI, rocking along rather well with production and new orders leading the charge. Employment is a bit softer for now, but jobs growth is still the more general likelihood.”  The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for April saw both options for measuring the PCI increase. The GDP-Weighted Index (56.1) increased 0.8 points from March, while the Free-Weighted Index (56.1) rose 1.5 points over the same period. This is the first time since December 2010 that both measures have produced the same value, and the highest value for the latter since May 2012. Like […]

A 52 strong trade mission flies out to Indonesia this weekend for two weeks of intensive briefings and meetings. The mission organised by Export New Zealand and the ASEAN New Zealand Combined Business Council is being led by Hon Maurice Williamson and Sir Ken Stevens, Chairman of Export New Zealand and executive chairman of Glidepath Group. Major events for the mission include a conference on New Zealand in Jakarta on Monday, May 20th, and the Minister’s opening at a Jakarta university of a photographic essay (and book) by Ans Westra – ‘The Crescent Moon’ – on Moslem life in New Zealand.  The delegation is made up of members of Export New Zealand, the ASEAN-NZBC from the food and beverage, education, geothermal and banking sectors together with a large contingent from sector group Aviation New Zealand. The mission is supported by ASB Bank and Commonwealth Bank Indonesia.  “New Zealand wants to forge much stronger relationships with Indonesia and this mission represents our commitment towards achieving that,” said Sir Ken Stevens, co-leader of the mission. “We want to show that the Prime Minister John Key’s state visit last year was not a once off event,” he said. “Collectively our mission presents a viable and formidable force to increase trade between our two countries.  “We’re looking forward to building new relationships and cementing those already in place across our diverse sectors.  “In particular we will be promoting New Zealand’s expertise in food and beverage and food safety, geothermal, education and aviation services. “The 20 strong aviation delegation is a special testament to our expertise in this field. We have world-class pilot training, airport development expertise and aircraft maintenance systems,” Sir Ken said. “The ASB Bank is delighted to support the strengthening business relationship between our two important markets,” said Mike Atkins, Head of […]

The Government confirmed today in the Budget it will push ahead with changes to the thin capitalisation rules that invest in New Zealand. The proposals were first announced for consultation in January this year. They would widen the thin capitalisation net to capture situations where a group of foreign investors “act together” to invest in New Zealand. The specific target is private equity arrangements. Revenue Minister Peter Dunne noted that further technical details still need to be worked through. Therein lies our concern. The current proposals hinge on a definition of “acting together” and the Government will need to be very careful not to cast its net too wide and discourage otherwise unrelated foreign investors from investing in New Zealand.  The initial proposals could have been implemented as early as 1 April 2014 but today the Government advised they would apply from 2015/16.  

BusinessNZ says Budget 2013 shows a careful and measured approach to spending in areas that have the potential to improve New Zealand’s competitiveness, such as a continued focus on innovation, internationalisation and skills. Chief Executive Phil O’Reilly says business will welcome the Budget’s $100 million-a-year International Growth Package, including business R&D assistance, National Science Challenges, the Marsden Fund and other support for innovation and productivity.  “Funding to attract more high-value tourism and to promote New Zealand’s international education sector are also practical measures to boost future export earnings,” Mr O’Reilly said. “Significant spending across the education and training sector is also positive, although the opportunity has been missed to make bolder reforms of interest-free student loans. “Welfare reform support announced in the Budget will help the move to assist welfare recipients into work, using an ‘investment approach’ – another improvement to the potential for greater employment. “Moves to improve the provision of social housing by extending the rent subsidy scheme to charities and non-government providers, and spending in areas to address child poverty will also invest in those in need. “ACC levy reductions announced in the Budget will be welcomed by business, however these have resulted from artificially high levies over recent years. We believe premiums should be set independently of Government to ensure they reflect insurance values rather than political considerations. “For the economy overall, the Government has made a positive move towards getting better outcomes from state assets with the announcement of a share offer for Meridian Energy this year, and is demonstrating prudent stewardship with its progress towards a balanced budget and lower debt and spending targets. “Bolder reform in the areas of retirement savings and age of eligibility for superannuation and interest-free student loans would also make a significant contribution to economic health,” Mr O’Reilly said. […]

Minister of Finance of Bill English’s fifth budget reconfirmed the Government’s track to a surplus of $75m in 2015. Hon Bill English has achieved this on the back of forecast GDP growth, rising tax revenues and continued expenditure restraint. The slower and costlier than forecast Canterbury rebuild costs have pushed the GDP growth track out further than previously expected.  Stronger forecast tax revenues has given the Government a bit more room to move in terms of additional new spending to the tune of $5.1bn over the four year forecast period.  The stronger forecast economic and fiscal position has given the Government confidence to undertake further fiscal rebalancing by reducing the stimulus applied to the economy which will free up resources for the private sector to take up the growth mantle. The Budget forecasts more Government costs to rebuild Canterbury, increasing the Government’s share of the rebuild from $13bn to $15.2bn. New initiatives include an internationally focused growth package with $100m per year additional support for tourism, R&D and international education. Health continues to consume ever larger amounts of Government expenditure with an extra $1.6bn of initiatives planned for the next four years. Overall, this Budget continues to walk the fine line between a credible path to surplus and damaging growth through the rapid withdrawal of stimulus.  

Returning the government books to surplus in 2014/15 gives business a lot of confidence, said Kim Campbell, chief executive of the Employers and Manufacturers Association. “This budget is a good one for keeping the emphasis on financial stability while helping the economy edge forward,” he said. “Three per cent GDP growth with inflation about one per cent is a meaningful achievement. “The Minister of Finance is to be congratulated. “Employers will be delighted with the news that ACC levies are to come down. “The intense focus being brought to bear on making housing more available and more affordable cannot come soon enough. “The extra investment going into skills and employment carry the right messages. “Though the increased investment in research and science is pleasing will still not be enough to bring us up to OECD measures. “On the downside there are no initiatives to spur on development in the regions, and only indirect acknowledgement of the headwinds our exporters have been facing. “Nevertheless we are pleased the Reserve Bank will enact as required its full range of macro prudential tools.”  

Continued momentum for new orders in the manufacturing sector contributed to a lift in the sector’s expansion rate, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for April was 54.5 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). Since the start of the year, activity in the sector has been both healthy and consistent, averaging 54.8 over the four months. Compared with previous April results, the 2013 value was 7.4 points higher than 2012. BusinessNZ’s executive director for manufacturing Catherine Beard said that 2013 continues to head in the right direction for manufacturers. “Results over the last four months provide a regular pattern of growth, which has been assisted by strong activity for new orders, both domestic and offshore.  “Another aspect that needs to be examined is the increasing disparity of activity between New Zealand and the Australian manufacturing sector. In comparison, the Australian PMI for April was 36.7, their lowest result since May 2009. In fact the 2013 year provides the two largest monthly differences in activity levels between the two countries since the New Zealand PMI began in 2002.  BNZ Senior Economist, Craig Ebert, said, “Perhaps the biggest positive in the latest PMI came from the fact new orders, way up at 59.4, met with dipping stocks (47.8). This strongly suggests production will not only keep ramping up, but needs to in order to avoid emptying the shelves”. Despite the continued healthy national result, only three of the five seasonally adjusted main diffusion indices were in expansion for April. New orders (59.4) again led the way with its highest result since February 2012. This was followed by deliveries (55.7), which has now experienced seven consecutive months in expansion. Production (55.3) increased […]

On Thursday treasurer Bill English is presenting the 2013 Budget for New Zealand. What would you, a manufacturer, a businessman, like to see included in the Budget to make business better? Are there more business incentives needed, tax breaks, assistance for exporters, greater access for R & D? Send me your ideas and I will publish them and share your vision with other NZ business people. The most incisive comment will receive a Company Profile in NZ Manufacturer and a 50% subscription discount for 12 months. Write now, get in quick…let’s do the Business Budget that Bill wont do!

BusinessNZ has welcomed today’s agreement for a new international convention facility in Auckland. Chief Executive Phil O’Reilly says New Zealand is currently lacking large convention infrastructure, and the SkyCity development will result in new business, growth and jobs that would not otherwise have occurred. “For New Zealand to deliver on the goal of achieving more high value tourism, an international quality convention centre is essential. “New Zealand, as one of the most remote tourism destinations on earth, needs facilities and attractions of world standard. “The partnership model that the Government and private sector are working together on for this facility is a good example of creativity and sound planning.” Mr O’Reilly welcomed the harm minimisation measures to deter problem gambling and noted that the number of additional pokie machines for the centre was the same as already granted in 2001, and would occur within a planned phase-down in numbers of overall. “Auckland and New Zealand will gain economic benefits from this development,” Mr O’Reilly said.