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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7/3/16

Room for RBNZ to cut rates


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The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during February 2016, shows total sales in January 2016 decreased 18.58% (year on year export sales decreased by 25.06% with domestic sales decreasing 1.45%) on January 2015.

The NZMEA survey sample this month covered NZ$216m in annualised sales, with an export content of 67%.

Net confidence fell to 12, down from 18 in December.

The current performance index (a combination of profitability and cash flow) is at 99.3, down from 101 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 97, down from 100 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 102.83, down on the last result of 107.83. Anything over 100 indicates expansion.

Constraints reported were 59% markets, 24% skilled staff, and 18% production capacity.

There was no net change in productivity for January.

Staff numbers for January increased 2.07% year on year.

Tradespersons, supervisors, managers, and professional/scientists reported a moderate shortage and operators/labourers reported a minor shortage.

“There appears to be some struggles showing for manufacturers in terms of export demand, with year-on-year export sales staying negative for four months. This is likely reflecting a continuing uncertain international environment and a number of soft export markets dampening demand. Domestic sales were slightly down, after positive year-on-year increases the last two months.” says NZMEA Chief Executive Dieter Adam.

“In recent months, despite some challenges in export markets and international conditions, confidence and indexes of performance, forecast and change, have been showing positive expectations of the future. However, January results showed the performance index, which includes profitability, cashflow and exchange rate, as well as the change indexes, moving down into contraction. The forecast measure, which has been exceptionally positive in recent months, moved down, but stayed in the positive.

“Exchange rates against our key currencies remain unfavourable, specifically against the Australian Dollar (AUD), which is stubbornly high, far above historical averages. This is a particular concern, given the high levels of manufacturing exports to Australia. Just because the USD cross rate is not as high as it used to be, and because the NZD appears to be resistant against further downward adjustment, doesn’t mean that exchange rates are at a level that would give our exporters a fair fighting chance in international markets. The fundamental structural weaknesses in our economy, and in our economic policies, have yet to be addressed - until that happens our manufacturers remain in a position of disadvantage in international markets.

“There is room for the RBNZ to cut the OCR 10th of March; inflation remains below target and the exchange rate is higher than what the RBNZ forecast in their December Monetary Policy Statement despite continued weakness in dairy prices. The housing market remains a challenge with work to be done, but the RBNZ should act to push back against low inflation expectations and the continued relative strength of our currency."  

 

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tags: survey, exports, rbnz, currency, manufacturing, exchange rate

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