Business News

NZIER’s Quarterly Survey of Business Opinion (QSBO) shows steady economic activity in the September 2011 quarter. Firms’ experienced trading activity is broadly unchanged (+2% from +3%) on a seasonally adjusted basis. This is consistent with annual economic growth of around 1.5%. Activity was stable in the September quarter. Retail and services sectors picked up, but manufacturing and construction slowed. Canterbury is rebounding from the earthquake disruption, but the rest of the country is flat. Retailers are expecting a bumper end to 2011, which may be attributable to the Rugby World Cup”. The survey shows a resilient economy heading into the latest phase of global economic uncertainty. However, most of the survey responses were received before the RBNZ’s interest rate announcement, our credit downgrades and the rapid deterioration in global sentiment. Canterbury rebounding from earthquake disruptions Activity is picking up, particularly for retailers and builders. The services sector, which was hit hardest, continues to struggle. Investment intentions have soared in Canterbury, to replace lost capital. Building investment intentions have surged, but they are slowing elsewhere in the country. Firms remain cautious about expanding while demand remains patchy. Contained inflation Easing costs and pricing intentions suggest inflation will be contained over coming quarters. There is emerging inflation in the construction sector, with prices rising for the first time in three years. This may be related to the Canterbury rebuild. Outside of the construction sector, inflationary pressures are subdued. Activity indicators are also flat outside of Canterbury. Heightened global tensions have already affected Australian business confidence, but Kiwi firms are still surprisingly optimistic. The RBNZ is clearly mindful of these risks and the OCR is likely to stay unchanged at 2.5% for some time.  

PwC (formerly known as PricewaterhouseCoopers) has signed a Memorandum of Understanding (MoU) with China Development Bank (CDB). The MoU was signed at Premier House, Wellington today by President of CDB Shanghai Branch GUO Lian and PwC Chief Executive Officer Bruce Hassall. On hand to witness the signing was Chinese Vice Premier HUI Liangyu and New Zealand Deputy Prime Minister Hon. Bill English. Mr Hassall believes China will be an increasingly important source of funding for New Zealand businesses and infrastructure projects and the MoU will enhance PwC’s market leading position working with New Zealand and Chinese businesses to facilitate investment and trade and is a genuine win win for all parties. “Signing this MoU is a landmark event in continuing to strengthen the relationship between PwC and CDB. CDB is committed to helping investment and development in New Zealand and particularly assisting with the reconstruction of Christchurch,” says Mr Hassall. Mr Hassall adds “today’s signing signals the first step on what we at PwC believe will be a constructive and positive path for the benefit of Christchurch businesses and the wider New Zealand economy.” By signing the MoU, PwC and CDB have agreed to cooperate on major development projects with particular emphasis on reconstruction and investment in the Canterbury region of New Zealand following the Canterbury earthquakes, as well as in agriculture, infrastructure, natural resources and finance.  

Delcam,which is represented in New Zealand by Camplex, held its annual Asian Technical Summit in Zhuhai, China, from 6th to 8th September as part of the celebrations of the fifteenth anniversary of the founding of its Delcam China subsidiary. The Summit is held each year to present the latest developments from the company to its leading customers, academicians and the technical media in the region. This year’s meeting, which was sponsored by HP, was the eleventh in the series and the second to be held in China. Close to 200 delegates attended, mainly from China but also from 10 other countries. The Summit featured presentations on the latest versions of Delcam’s range of CAM systems before their official launch at the EMO exhibition. Updates were also included on the other software in the Delcam portfolio, including the company’s design and inspection programs, plus the dedicated software for the footwear, orthotics and dental industries. Guest speakers alongside the Delcam presentations included Alastair Morgan, Consul General from the UK Consulate in Guangzhou, Kexin Chu, CEO/Chairman of First Auto Works Die Manufacturing Co., Ltd., Marco Kormann from Adidas Group, and Naoto Kitayama from Japan’s Tatematsu Mold Co. Ltd. Delcam formed its Delcam China subsidiary in 1996 after making initial sales into the country through its joint ventures in Taiwan and Hong Kong. Delcam China now employs more than 50 staff in its headquarters in Beijing and regional offices in Shanghai, Shenzhen, Chengdu, Xi’an, Wenzhou, Qingdao and Quanzhou. In addition, the Delcam Hong Kong and Delcam Taiwan joint ventures operate two offices each in mainland China, and there are more than 30 reseller offices in the country. The Summit comes at a time when Delcam is setting new records for its business in China. Sales of software have increased by more than 50% in […]

Pacific Island countries contribute far more to the New Zealand economy than many people realise. In the past year ending June 2011 our trade surplus with the Pacific Islands was more than $1.3 billion! We need to balance our Pacific trade by ensuring we are actively encouraging exports to New Zealand; working in partnership not just making handouts; not forcing our values on other cultures but working with them to harvest the resources that are available; helping in setting policies that ensure resources are farmed not stripped. Multi-lateral trade is the aim of business groups that have been active in the Pacific Islands for many years and one of these groups, covering all the Pacific Island Countries is The New Zealand Pacific Business Council. The New Zealand Pacific Business Council Inc. (NZPBC) was formed in early 2005 as a not-for-profit incorporated society. The Council is a multi-lateral, private enterprise driven membership organisation whose primary objective was to promote and facilitate “two-way” trade and investment between New Zealand and 26 Pacific countries and territories within Polynesia, Melanesia and Micronesia. Whilst our focus is still on ‘two-way’ trade we recognise the importance of supporting trade between island countries – hence our interest in ‘multi-lateral’ trade. The NZPBC consists of over one hundred New Zealand companies interested in, or operating in the Pacific Islands. Members also include the Ministry of Foreign Affairs and New Zealand Trade and Enterprise. Over the past six months the NZPBC has revved up its operation to ensure members have more opportunities to meet Pacific trade visitors, to network amongst each other, and participate in trade missions to the Pacific. Business After 5 functions are held each month, and three trade missions are planned per year (some in conjunction with other business councils) and the newsletter and web site […]

August saw a mix of results that kept manufacturing in expansionary mode, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for August was 52.9 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). Although this was down slightly on the July result of 53.2, almost all results since November 2010 have been above 50.0 and within a relatively narrow band between 52.7 and 54.7. BusinessNZ’s Executive Director for manufacturing, Catherine Beard, said that the negatives for August were equally matched by positives elsewhere. “Over the last four months we’ve experienced the steadiest period of activity since the survey began in 2002,” she said. “Looking at the current month, while elements of the manufacturing sector, such as those by region and sub-industry fared worse in August, this was counteracted by pick-ups elsewhere, notably the Otago-Southland region and the metal product manufacturing sector.” BNZ economist Doug Steel said that it is important to look at all information in assessing economic performance. As ever, it pays not to read too much into any one number. While this is true at the best of times, it is especially important now with so many moving parts. “August’s PMI continues a remarkably steady run over recent months, but masks considerable and widening variation in the detail. While this variation reflects the many factors pushing and pulling the economy, it is encouraging to see the overall trend remain positive,” Doug Steel said. Despite the dip in expansion, four of the five seasonally adjusted main diffusion indices were still in expansion during August. Deliveries (55.8) led the way with a result similar to June 2011, followed by new orders (54.3). Encouragingly, production (53.7) increased 1.2 points from July 2011, while finished stocks […]

The Reserve Bank of New Zealand (RBNZ) should take the Swiss National Bank’s lead at the Official Cash Rate announcement on Thursday and take action on the exchange rate say the New Zealand Manufacturers and Exporters Association (NZMEA). Switzerland, like New Zealand, is a small trade exposed economy that relies heavily on export revenues and they have recently moved to peg their currency to support and maintain the competitiveness of their exporters. Philipp Hildebrand, Chairman of the Governing Board of the Swiss National Bank made the announcement: “The Swiss National Bank is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below one Swiss franc twenty. The SNB will enforce this minimum rate with the utmost determination.” NZMEA Chief Executive John Walley says, “This is the sort of approach New Zealand needs to take. It does not require a currency peg as the Swiss are using, any number of approaches can be adopted, but whatever the method chosen the same overt commitment to deal with an overvalued currency needs to be demonstrated to get the right reaction from currency markets.” “As a comparison the RBNZ’s largely hands off approach encourages the currency markets to play that predictability without fears of any sustained intervention.” “New Zealand must look to advance its own interests as the rest of the developed world are doing – this requires action from the Government and the RBNZ. More of the same don’t scare the horses approach will see an ever declining tradable sector and worsening debt problems as a result.”  

The agreement struck for government to provide funding for workers required to ‘sleepover’ as part of their workplace arrangements has been cautiously welcomed by the Employers & Manufacturers Association. “Its good the sleepovers issue is to be resolved, but some employers will be nervously waiting to see how far the government’s generosity will extend,” said David Lowe, Employment Services Manager for the EMA. “Employers are pleased the government is prepared to stump up with the funding necessary to settle the case,” he said. “However the precedent affects more employers than just those in the disability and health care sectors, and it remains to be seen if the legislation applies to all employers, or just those who are government funded, or those who are government funded through the health vote. “Some employers in education and other sectors will be nervously watching how far the breadth of the proposed legislation will extend before giving it an unqualified tick.”  

A static performance is not enough when our competitors are accelerating, says BusinessNZ. Commenting on the World Economic Forum’s Global Competitiveness Report, BusinessNZ Chief Executive Phil O’Reilly (left) said this was the clear message from this year’s report. Two years ago New Zealand ranked as the 20th most competitive nation in the world; last year that slipped to 23rd; and this year it is 25th – because New Zealand’s score has remained stable while other countries have improved.   Mr O’Reilly said the report was helpful in highlighting areas for improvement. “Some of the problem areas result from New Zealand’s geographic location and small population size, including domestic market size (60th), state of cluster development (60th), value chain breadth (59th), local supplier quantity (58th) and intensity of local competition (45th). “But other problem areas are more within our power to fix. We should focus on doing better in the areas of balancing the budget (112th), taxation as a percentage of profits (51st), quality of infrastructure (50th) and government debt (47th). These reflect a need for more restrained, better quality government spending.” “Gaining better scores around innovation and technological readiness should also be a priority. “New Zealand has retained high rankings for many of the foundational elements of competitiveness – health, education, low corruption, low trade barriers, low inflation and ease of starting a business. We need to build on these to gain higher rankings in the more sophisticated areas of business and trade.” The Global Competitiveness Report ranks countries according to their ability to compete internationally, using factors such as markets, institutions, infrastructure and human resources.  

New Zealand’s Global Competitiveness Index score has remained stable since last year but the country has slipped two places to 25th of 142 countries, overtaken by Israel and Malaysia. New Zealand’s overall performance is limited by innovation and business sophistication, the most important drivers of economic performance in advanced economies. The New Zealand Institute Director Dr Rick Boven says, “Government has increased efforts and investment in innovation but we cannot yet see evidence of improvement. Other countries are doing more. New Zealand needs to lift performance more or our competitive position will continue to slide”. The Global Competitiveness Report is produced annually by the World Economic Forum.Switzerland ranked 1st for the third year in a row, followed by Singapore which overtook Sweden to claim second position. The United States declined for a third year to 5th place as macroeconomic vulnerabilities continue to build and some aspects of the institutional environment have raised concern among business leaders.  Canada (12th) slipped out of the top ten, replaced by the United Kingdom.  Australia ranked 20th a drop of four places since last year. China improved by one place to 26th, continuing to lead the way for large developing economies. Among the four other BRICS economies, South Africa (50th) and Brazil (53rd) move upwards while India (56th) and Russia (66th) experienced small declines. The World Economic Forum Founder and Executive Chairman, Klaus Schwab says that while most advanced economies are experiencing a sluggish recovery from the economic crisis, much of the developing world is seeing relatively strong growth. The Global Competitiveness Index is made up of 111 indicators categorised into twelve pillars of competitiveness in three sub-indices:Basic requirements,Efficiency enhancers, andÊInnovation and sophistication factors. New Zealand continues to do well in Basic requirement and Efficiency enhancers, ranking 17th (14th last year) and 18th (same as […]

BusinessNZ is pleased to see the Labour Party’s youth skills and employment policy focusing on the crucial need to ensure that all young people under 20 years of age are learning or earning. BusinessNZ, Chief Executive, Phil O’Reilly said training more apprentices is something many businesses will welcome. “Both parties need to ensure that available training opportunities form a coherent vocational education system with clear pathways to work. “We must also focus on driving performance with strong accountability mechanisms so more of our young people are better prepared for employment. “We have to do a better job of connecting learning at all levels with the benefits it delivers young people in the labour market. “We know that the employment prospects for young people with no or low skills and/or experience are very sensitive to wage levels, so we need to ensure that taking on apprentices and employing young people is an attractive proposition for employers. “Labour’s policies recognise the importance of training, but it’s also important that the vocational system recognises employers’ needs as well.” BusinessNZ welcomes what appears to be a cross party consensus around initiatives like Gateway, Trade Academies, vocational pathways in schools, strengthened careers education, and support for the Recognised Seasonal Employers scheme.