Man­u­fac­tur­ing sales make a turn in May – 3 July

DEMM Engineering & Manufacturing - - NEWS -

The latest New Zealand Man­u­fac­tur­ers and Ex­porters As­so­ci­a­tion (NZMEA) Sur­vey of Busi­ness Con­di­tions com­pleted dur­ing June 2015, shows to­tal sales in May 2015 de­creased 9.13 per­cent (year on year ex­port sales de­creased by 7.59 per­cent with do­mes­tic sales de­creas­ing 11.20 per­cent) on May 2014. The NZMEA sur­vey sam­ple this month cov­ered NZ$397m in an­nu­alised sales, with an ex­port con­tent of 58 per­cent. Net con­fi­dence fell to -13, down from 17 in April.

The cur­rent per­for­mance in­dex (a com­bi­na­tion of prof­itabil­ity and cash flow) is at 96.3, down from 100.3 last month, the change in­dex (ca­pac­ity util­i­sa­tion, staff lev­els, or­ders and in­ven­to­ries) was at 100, up from 98 in the last sur­vey, and the forecast in­dex (in­vest­ment, sales, prof­itabil­ity and staff) is at 102.5, down on the last re­sult of 105.67. Any­thing over 100 in­di­cates ex­pan­sion.

Con­straints re­ported were 81 per­cent mar­kets, 13 per­cent pro­duc­tion ca­pac­ity and six per­cent skilled staff.

Net 13 per­cent of firms re­ported a mod­est rise in pro­duc­tiv­ity in May. Staff num­bers for May in­creased 1.20 per­cent year on year. Trades­per­sons, su­per­vi­sors, man­agers, pro­fes­sional/sci­en­tists and op­er­a­tors/labour­ers all re­ported a mod­er­ate short­age.

“May’s re­sults showed a turn­around in the re­cent pos­i­tive trend for do­mes­tic sales, mov­ing into year on year re­duc­tions in turnover af­ter five months of year on year ex­pan­sion. Ex­port sales also fell into the neg­a­tive af­ter two months of good year on year in­creases. We hope this month’s re­sults are just a tem­po­rary blip, rather than a neg­a­tive trend, how­ever the re­sults are rel­a­tively in line with other re­cent busi­ness sur­veys,” says NZMEA Chief Ex­ec­u­tive Di­eter Adam.

“This month’s sur­vey saw con­fi­dence mov­ing back into the neg­a­tive, af­ter break­ing into the pos­i­tive last month. The per­for­mance in­dex fell into con­trac­tion ter­ri­tory (be­low 100), and the forecast in­dex, de­spite fall­ing on last month, stayed in ex­pan­sion. Staff num­bers in­creased year on year, but more mod­estly than re­cent months.

“The re­cent cut in the OCR by the Re­serve Bank of New Zealand (RBNZ) was a welcome move for man­u­fac­tur­ers and ex­porters. We have al­ready seen this have an ef­fect on our cur­rency, help­ing it to con­tinue its down­ward trend that is re­quired to put our man­u­fac­tur­ers and ex­porters on a level play­ing field. We en­cour­age the RBNZ to fol­low through with a sec­ond in­ter­est rate cut in July.

“Even with the fall back from re­cent highs, the weak­ness of the Aus­tralian Dol­lar con­tin­ues to be re­ported as a con­cern, along with the gen­eral weak­ness of the Aus­tralian mar­ket. The mar­ket con­straint fell back a lit­tle on last month, but re­mained at el­e­vated lev­els – mar­ket con­di­tions con­tinue to be by far the big­gest re­ported con­straint to growth. “says Adam.

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