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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8/8/11

Sales fall and currency continues to impact confidence


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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during July 2011, shows total sales in June 2011 decreased 9.6% (export sales decreased by 17.3% with domestic sales decreasing 2%) on June 2010.

The NZMEA survey sample this month covered NZ$338m in annualised sales, with an export content of 45%.

Net confidence declined to -38, down from the -33 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 93, down from 102 in May, the change index (capacity utilisation, staff levels, orders and inventories) remained steady at 102, and the forecast index (investment, sales, profitability and staff) is at 99.75, down on May’s result of 101.75. Anything less than 100 indicates a contraction.

Constraints reported were 63% markets, 25% production capacity and 13% capital.

Staff numbers for June increased year on year by 3.34%.

“The surging New Zealand Dollar has started to have a major impact on sentiment,” says NZMEA Chief Executive John Walley. “Sales are down and returns are suffering so it is no surprise that the current performance index, the forecast index and the confidence rating are all heading south.”

“The message was unanimous from respondents that the unprecedented high dollar is completely unwelcome. We can see sales falling at the same time as capacity constraints are identified; throughput capacity was cut in the face of the Global Financial Crisis and it is unlikely to be expanded under current circumstances. In fact hard won offshore markets might well be abandoned.”

“There are considerable concerns over the global economic outlook in Europe and the USA. This and the prospect of higher interest rates and a higher exchange rate through hikes in the Official Cash Rate, delivered by our policy settings, are also contributors to the drops in confidence and forecasts.”

“Working through what are hopefully post earthquake issues around insurance and damage remediation continue to be a major distraction for Canterbury respondents, but there have been some reports that business lost in March has been recovered in the last month or so.”

“Action on the policy framework to deliver a lower and more stable exchange rate remains the major issue for manufacturing exporters leading into the election. Our current policy settings carry for New Zealand a highly indebted future with little prospect of being able to earn our way out of trouble.”

“A balanced economy will not happen without a major change to New Zealand’s policy settings.”

 

 

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tags: survey, exchange rate, canterbury earthquake, ocr, monetary policy

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