Sales flatten out but jobs still under threat
The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during January 2010, shows total sales in December 2009 decreased 6% (export sales decreased by 7% with domestic sales decreasing 4%) on December 2008.
The NZMEA survey sample this month covered NZ$482m in annualised sales, with an export content of 42%.
Net confidence rose to -11, up from the -23 result reported last month.
The current performance index (a combination of profitability and cash flow) is at 101.5, up from 98.5 in October, the change index (capacity utilisation, staff levels, orders and inventories) went down to 101 from 103.75 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 98, down on the previous result of 101. Anything less than 100 indicates a contraction.
Markets were the only reported constraint.
Staff numbers for December decreased year on year by 17%.
“Sales look to be bottoming out for manufacturers, with markets picking up, albeit in patchy fashion,” says NZMEA Chief Executive John Walley. “However, staff numbers are continuing to track down as those firms in poorer performing markets continue to shed staff and those in better markets take advantage of spare capacity rather than hiring. The higher than expected unemployment rate of 7.3% announced by Statistics New Zealand yesterday reflected this trend.”
“Confidence has improved again but comments about uncertainty still dominate. The uncertainty surrounding the recession means that purchase orders generally remain short-term. This leaves many firms living on a month to month basis. On the investment side many firms have identified research and development projects, but remain unwilling to invest while policy settings hold up the currency.”
“The Government’s intentions to follow through on the advice given by the Tax Working Group in this year’s budget to broaden the tax base to include property, and to incentivise saving with a higher GST rate are a start. Hopefully we will see more action around the findings of the Capital Market Development Taskforce as well, because these are the sort of changes that encourage firms to invest further – the real economy matters and policy has long ignored that point.”
“The glaring omission from advice sought by the Government last year was any effort around stabilising the New Zealand dollar. It is notable that as the dollar has become increasingly volatile over the past decade, investment intentions and confidence throughout the tradeable sector have slowly ebbed away.”
“A more even-handed tax system and monetary policy reform are necessary to see firms investing in export development and jobs.”
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