Survey - Hope triumphs over uncertainty as confidence improves
The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during April 2010, shows total sales in March 2010 decreased 0.5% (export sales decreased by 13% with domestic sales increasing 11%) on March 2009.
The NZMEA survey sample this month covered NZ$572m in annualised sales, with an export content of 41%.
Net confidence rose to 64, up from the 36 result reported last month.
The current performance index (a combination of profitability and cash flow) is at 103.5, down from 105.5 in February, the change index (capacity utilisation, staff levels, orders and inventories) is at 102, down on February’s result of 103, and the forecast index (investment, sales, profitability and staff) went up to 107.25 from 106.25 last month. Anything less than 100 indicates a contraction.
Constraints reported were 91% markets and 9% production capacity.
Staff numbers for December decreased year on year by 8%.
“Confidence has continued to grow but falling sales and job numbers demonstrate that the confidence is built on the hope of more sales and more jobs, not the reality of current performance,” says NZMEA Chief Executive John Walley. “Export sales are continuing to suffer with firms selling to North America and Europe experiencing difficulties with both markets and the currency. Domestic sales are faring better but there is a concern that some of the demand is due to restocking supply chains rather than any genuine recovery."
“This just goes to show that confidence indicators are a poor proxy of what is really going on in the economy; we hope the RBNZ sees this and stops talking up the recovery and the currency. I am not quite sure who is served by the RBNZ talking up the recovery; why say things that reduce returns to the real economy?”
“The tradeable economy still needs monetary policy stimulus, and the longer it stays in place the more economic rebalancing will happen. Given the absence of inflationary pressure in the economy, the general weakness of the recovery and the reluctance of Governments elsewhere to withdraw stimulus, there is little reason for the RBNZ to change its current position.”
“The budget looks destined to be another triumph of rhetoric over reality. The fiddling round the edges hinted at so far will have little positive impact on the real economy. The fact that Australia has also failed to make any significant tax changes does not excuse the timid reaction to the Tax Working Group’s report for example. A monetary policy review is also long overdue with potential Official Cash Rate rises likely to cause the already overvalued exchange rate to appreciate further.”
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