Business News

Service sector expansion for May continued a solid run of recent expansion, according to the BNZ – BusinessNZ Performance of Services Index (PSI). The PSI for May was 56.2. This was identical to the result for April, and given both March and February stood at 55.7 this represents a very stable and healthy level of activity for the sector (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining). Compared to previous May results, the 2013 value was the highest since the May 2007 value. BusinessNZ chief executive Phil O’Reilly said that the healthy levels of activity, now evident for four consecutive months, is helping the sector follow a brighter path for growth than in recent years. “However, it is important to point out that the first few months of 2012 started out in a similar fashion, but faded during the winter months. Time will tell whether other recent and positive economic indicators for the economy will lead to further expansion in the service sector.” BNZ senior economist Craig Ebert said, “This is the strongest sustained growth pulse we’ve seen from New Zealand’s services sector since the economy began grinding its way out of recession back in 2009. No wonder the PSI jobs index is now turning clearly positive.” The seasonally adjusted BNZ – BusinessNZ Performance of Composite Index or PCI (which combines the PMI and PSI) for May saw both options for measuring the PCI again increase. The GDP-Weighted Index (56.9) increased 0.6 points from April, while the Free-Weighted Index (58.2) rose 1.8 points over the same period. For the latter, it was at its highest level of overall activity since May 2007. All five main sub-indices were in expansion during May. While new orders/business (59.5) and activity/sales (56.9) both […]

The private members Bill that would allow employers to take on temporary workers to replace people going on strike needs a lot of thought and debate, the Employers & Manufacturers Association says. “At first flush employers could think the Bill a good idea without taking into account unintended consequences,” said Kim Campbell, EMA’s chief executive. “While its principles are worth exploring it could prove very divisive. “Right now we are focused on getting the current round of minor employment law changes bedded in. “New Zealand communities place a high value on fairness and the Bill could have consequences that would be considered unfair. “In spite of several high profile cases we have had 10 to 15 years of harmonious workplace relations and don’t want to jeopardise that. “We need to look carefully at the implications of industrial action on essential industries such as the ports and hospitals, as well as on small businesses. “Also employers don’t want to see the law changed every time there is a change of government and we can foresee law based on this Bill may not last.”  

The manufacturing sector recorded its highest level of activity for almost nine years, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).  The seasonally adjusted PMI for May was 59.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This is the highest level of overall expansion since June 2004. Compared with previous May results, the 2013 value was the highest since the survey began in 2002. BusinessNZ’s executive director for manufacturing Catherine Beard said that the May result showed strong activity in key aspects of the sector. “The key sub-indicators of new orders and production have both produced strong levels of expansion for May, which has significantly boosted the national figure. Also, after a lengthy period of time in the doldrums, employment picked up in May. “The strong result is mirrored in the comments from respondents, which were over 58% positive – the highest this year. A number of these comments outlined the improving building/construction sector, increasing offshore orders and new customers/opportunities for their business. The mood of the sector is typified by one respondent noting that after 5 years they now feel confident enough to hire extra staff.” BNZ Economist Doug Steel said that PMI results do not get much bigger than this, even globally.  “The pick-up is material. It puts upside risk to our manufacturing and overall economic growth forecasts over coming quarters. The strong result essentially gives us more confidence that the recent and forecast upswing in construction activity will flow through to manufacturing activity, with the usual lag.”  Given the strong national result, all five seasonally adjusted main diffusion indices were in expansion for May. New orders (63.1) again led the way with its highest result since July 2004. This was followed by production […]

New minerals exploration permits awarded today will help create jobs and lift the Northland economy, Energy and Resources Minister Simon Bridges says. Five permits have been offered to three companies – Tai Tokerau Minerals Limited, Waimatenui Exploration Limited and De Grey Mining Limited – as a result of the Northland 2012 tender which sought interest in exploring for metallic minerals in the region. “This presents an exciting opportunity for Northland and for New Zealand. There is significant potential for the country to grow the economic contribution made by minerals,” says Mr Bridges. “The sector already contributes around $20 million in royalties to government each year, and contributes over $1.1 billion to the economy. The Government wants to see regions like Northland reap the benefits, directly and indirectly, of minerals development. “But this is not about exploration and development at any cost. This is why the Government has recently put in place a new, world-class regulatory regime for the responsible management of the country’s mineral resources,” Mr Bridges says. The Northland 2012 tender process began in March last year with consultation with iwi and local authorities, and the competitive tender closed in December. Bids were evaluated by an expert panel from New Zealand Petroleum and Minerals. The five-year permits allow exploration to be undertaken in defined areas of Northland.  

The five year permits for minerals exploration on offer to three companies in Northland will provide a useful boost to the region’s growth outlook, says Kim Campbell, chief executive of the Employers and Manufacturers Association.  “Northland needs this sort of responsible exploration,” Mr Campbell said. “The region’s employment prospects stand to gain handsomely both from the exploration process, and more so should a worthwhile discovery be made. “Then there’s the downstream money minerals explorers spend in the area while they’re at work. “We’re confident modern mining techniques can deliver sound economic benefits with minimum downside for Northland communities, as they can elsewhere in the country.”    

Minerals exploration permits awarded today are a positive development in growing the regional economy, says BusinessNZ. Three companies have been offered permits for exploring for metallic minerals in the Northland region, under the new environmental regulatory regime. BusinessNZ Chief Executive Phil O’Reilly says responsible development of mineral resources is part of a balanced approach to growing jobs and growth in several parts of New Zealand.  “Development initiatives conducted following consultation with local communities, under modern environmental regulations, are a good component of a wider move towards a more vibrant regional economy,” Mr O’Reilly said.  

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during May 2013, shows total sales in April 2013 increased 3.28% (export sales increased by 0.76% with domestic sales increasing 5.53%) on April 2012. The NZMEA survey sample this month covered NZ$489m in annualised sales, with an export content of 46%. Net confidence rose to -9, up from the -50 result reported last month. The current performance index (a combination of profitability and cash flow) is at 101, up from 92.5 in March, the change index (capacity utilisation, staff levels, orders and inventories) went up to 100 from 99 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 99.75, up on March’s result of 97. Anything less than 100 indicates a contraction. Constraints reported were 82% markets, 9% production capacity and 9% skilled staff. Staff numbers for April decreased year on year by 0.74%. “This month’s results are a bounce back from last month, driven mostly by improved domestic sales. Export sales improved from their negative position last month. Generally trends are flat to negative.” says NZMEA Chief Executive John Walley. “Falling staff numbers reinforces a soft declining overall trend, that said manufacturers continue to report difficulties in finding skilled staff.” “Net confidence improved but is still in negative territory – the number of optimists continues to decline.” “For exporters, markets are soft, and improving domestic demand is little help for those who operate predominately in export markets.” “A recent RBNZ speech from Graeme Wheeler expressed a more pessimistic sentiment than usual, reflecting concerns over the overvalued dollar, increasing current account deficit and risks in the housing and credit markets to financial stability. We have expressed this view for some time and encourage the RBNZ to be much more active […]

SouthMACH 2013 is now in the last afternoon of the two day event. Below are pictures from the show. Cold weather was everywhere, but enthusiasm was high.      

BusinessNZ Chief Executive Phil O’Reilly has been elected Chair of the Business and Industry Advisory Council (BIAC) to the OECD. The BIAC is the voice of business at the OECD – the world’s foremost provider of integrated statistics and fact-based policy recommendations. The BIAC network includes national business, industry and employer associations from OECD members and observer countries, as well as international sector-specific associate experts. Mr O’Reilly said it was an honour to serve the BIAC, whose advocacy was vital for growth and employment internationally, and a great opportunity for New Zealand business to contribute to this work. Mr O’Reilly has been a member of the Board of the BIAC for three years. He will continue in his role as Chief Executive of BusinessNZ in addition to serving as BIAC Chair.