Survey - Export led recovery: not yet
The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during May 2010, shows total sales in April 2010 increased 7.9% (export sales decreased by 5% with domestic sales increasing 19%) on April 2009.
The NZMEA survey sample this month covered NZ$563m in annualised sales, with an export content of 40%.
Net confidence fell to 46, down from 64 last month.
The current performance index (a combination of profitability and cash flow) is at 102.5, down from 103.5 in March, 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 108, up on March’s result of 107. Anything less than 100 indicates a contraction.
Constraints reported were 69% markets, 23% production capacity and 8% capital.
Staff numbers for April decreased year on year by 0.1%.
“Sales have increased on 2009, but reports have indicated that many manufacturers are suffering lower profitability despite the higher sales figures,” says NZMEA Chief Executive John Walley. “Domestic sales are continuing to grow while export sales and returns are volatile.”
“Export markets are patchy with Australia growing, the US stagnant and Europe weakening. Exporters to Europe are having a tough time due to the financial instability and the resulting fall in the Euro.”
“Staff numbers have not yet returned to growth overall, but there are reports of some firms ending short time working, adding shifts and taking on more staff.”
“Confidence and index numbers have dropped back a bit but generally reports are that things have shown improvement in 2010. The hope is that this will continue, but there is no export led recovery at this stage. So far it is an entirely domestic story and many wonder how long that can last.”
“The Monetary Policy Statement on Thursday should explicitly recognise the fragility of the recovery and that even though domestic sales are filling the hole in export markets, significant capacity remains in the economy. From a demand perspective we still have a long way to go, so there is little point in risking any recovery. The Reserve Bank can wait until September at least.”
“There has been significant disappointment expressed around the budget. The removal of accelerated depreciation in particular will be a setback to any recovery in productive investment. The lack of action around addressing bias in our fiscal policy and the inadequate replacement for the R&D tax credit compound this.”
“All in all Budget 2010 fell a long way short of any sort of step change from the perspective of the real economy.”
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