Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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3/6/11

Record dollar level stifles growth


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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during May 2011, shows total sales in April 2011 decreased 3% (export sales increased by 11% with domestic sales decreasing 9%) on April 2010.

The NZMEA survey sample this month covered NZ$395m in annualised sales, with an export content of 36%.

Net confidence rose to 13, up from the -10 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 99.5, down from 100.5 in March, the change index (capacity utilisation, staff levels, orders and inventories) went down to 102.25 from 103.25 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 103, up on March’s result of 102. Anything less than 100 indicates a contraction.

Constraints reported were 37.5% markets, 25% production capacity, 25% skilled staff and 12.5% capital.

Staff numbers for April increased year on year by 0.3%.

“The exchange rate is at a record high against the US dollar and this is threatening the viability of some of our high end exporters,” says NZMEA Chief Executive John Walley.

“It is vital that we see some action from the Government and the Reserve Bank on this to ease the pressure.”

“It is irresponsible to paint this as just a US dollar story; our dollar has reached a three year high against the Trade Weighted Index. The cross rate with Australia is some good news but we should be looking to expand export markets not narrow them to the few countries which have viable cross rates.”

“Manufacturers exporting for Australian consumption are doing well but for those selling pass through intermediate products, volumes are falling as the high Australian cross with the USA is damaging Australian manufacturers.”

“There has been a pick-up in confidence from the past few months indicating that there has been some improvement in trading conditions. It has also been noted that while large corporates are spending again there is less activity from smaller companies.”

“There is still some distraction and disruption from the Canterbury earthquake. Feedback on slow action from insurance companies is beginning to show. Firms are struggling to get all of their material damage fixed before their Business Interruption Insurance runs out. There are also problems attracting staff with little interest in working in Christchurch and pressure on low wage jobs with unskilled labour getting paid higher wages in deconstruction projects.”

“The overriding message from manufacturers and exporters is that the persistent overvaluation and volatility of the currency must be dealt with. We expect to see political parties detailing their policy approach to the currency problem in the next electoral term in the lead up to the election. The required rebalancing will never occur without the exchange rate being addressed.”

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tags: survey, currency, canterbury earthquake, reserve bank

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