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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2/9/11

Export sales recover


Print-friendly 1 comment(s) Posted in: In the media

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during August 2011, shows total sales in July 2011 increased 13.5% (export sales increased by 16.4% with domestic sales increasing 11.2%) on July 2010.

The NZMEA survey sample this month covered NZ$439m in annualised sales, with an export content of 46%.

Net confidence rose to -22, up from the -38 result reported last month.

The current performance index (a combination of profitability and cash flow) is at 96, up from 93 in June, the change index (capacity utilisation, staff levels, orders and inventories) went down to 99 from 102 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 103, up on June’s result of 99.75. Anything less than 100 indicates a contraction.

Constraints reported were 78% markets, 11% staff and 11% production capacity.

Staff numbers for July increased year on year by 2.8%.

“Export sales have recovered this month although continuing currency pressures will reduce returns,” says NZMEA Chief Executive John Walley. “Favourable conditions remain for those exporting to Australia and Asia driving the sales expansion.”

“The indexes and confidence measures are still a concern with the performance index in particular showing the loss of profitability and the confidence rating remaining in negative territory where it has been for six of the seven months surveyed so far this year. The number of pessimists has strong grown strongly as the no change group has contracted.”

“Overall the demand for New Zealand’s exports is holding up for the moment, but with the global outlook very uncertain this could change quickly.”

“Comments from the survey covered reduced margins due to the high New Zealand Dollar and concerns over whether demand from overseas markets will hold up. Christchurch respondents also noted that ongoing impacts from the earthquakes were upsetting staff and worrying customers.”

“With the issues in the United States and Europe it is likely that exchange rate pressures will worsen over the next few months. This will continue to threaten the viability of exports to those areas.”

“A response to the actions of other countries who seek to weaken their currencies should be a priority for the Government and the Reserve Bank. The exchange rate as it stands is a punitive tax on exporters and encourages spending overseas; hardly what is needed to rebalance the economy.”

 

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tags: survey, business confidence, exchange rate, reserve bank, export margins

comments

1 Comment(s)



Dave Wolland - 13 September 2011 at 20:52 PM
Wheel Of Fortune

If you want to make things or grow produce commercially in NZ, one of the biggest difficulties you have to deal with is the way our government chooses to use a floating exchange rate to help regulate our economy. I wonder whose bright idea it was to use our unstable dollar in this way and delivering Kiwi business profitability into the hands of fund managers who handle the savings of Chinese banks, Japanese housewives and Belgian dentists etc.

To get a take on what is happening overseas, just imagine how you would have to cope if the NZ internal economy operated like the global economy - where districts (or provinces) had their own exchange rate that was changed daily by professional gamblers in the Sky City Casino. To further complicate matters, some districts would also set their exchange rates to ensure a continual economic advantage over other districts.

If you travelled around NZ, imagine how frustrating it would be trying to work out the going rates every day so you could control your spending and income expectations in localities only a few hours from your front door. I think it would be incredibly complicated, inefficient and unfair.

Obviously, in our domestic economy, we need a single exchange rate for commerce to run efficiently along with one main language, commercial and social laws etc. Perhaps there is a solution here to help the World's economic woes by eventually having one world currency and the same commercial standards. Fair trading agreements would also need to be negotiated to establish a real level playing field – in the same way The EEC takes in new members perhaps.

A logical place for us to start would be to get an exchange rate parity and a real free and fair trade deal with Australia; then (in steps), negotiate the same sort of arrangement with the U.S.A., Canada, Europe, Japan and the rest of the World. If a shared exchange rate became established, as it does within our domestic economy, we would know at last the real costs of goods and services.

This concept might help stem the wealth transfer taking place from the West to Asia and allow wealth to be generated within each country influenced by its own natural advantages. It might also help environmentally by exposing the real cost of transport and energy.

Initially, in New Zealand, the value of exports might fall in traditional markets. However quotas and tariffs would probably disappear and greater access would assist the potential to create improved economies of scale and that would reduce costs. Spending power within New Zealand would increase as well and so many input costs would decline.

I heard President Obama on the radio saying that his government will strive to lift his country out of the recession by reforming the finance sector and promoting ‘Fair and Free Trade”. With our much smaller economy we could succeed years before he does and show the world that it can be done.

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