Exporting manufacturers build in confidence
A turnaround in confidence among exporting manufacturers can be attributed to both the weaker kiwi currency and the confidence they can win customers against Asian competitors.
That is the view of Dieter Adam, chief executive of the New Zealand Manufacturers and Exporters Association and association members surveyed in June. The NZMEA’s survey of business conditions completed during July 2015, shows net confidence rose to 6, up from minus-13 in May.
Adam said many manufacturers felt the kiwi dollar was going to stay down for longer, rather than rebound in the months ahead. Also their clients and others were no longer always choosing a Chinese or Asian manufacturing option just because it was cheaper.
The survey shows total sales in June 2015 decreased 6.42 per cent from the same month a year earlier. Year on year export sales decreased by 11.49 per cent with domestic sales decreasing 1.35 per cent on June 2014.
The NZMEA survey sample this month covered $438 million in annualised sales, with an export content of 47 per cent. A net 17 per cent of firms reported a modest rise in productivity in June.
Staff numbers for June increased 4 per cent year on year. Association members wanting tradespersons, supervisors, managers, scientists and operators or labourers all reported a moderate shortage.
‘‘Sales in June remained in the negative year on year, although less negative than May’s result,’’ Adam said. ‘‘This month sentiment was generally up, with net confidence improving back into the positive.’’
Staff numbers for June improved, reflecting a similar result to this week’s Household Labour Force Survey release by Statistics New Zealand which showed a very positive manufacturing employment.
Many manufacturers had gone through a changes in the past three or four years, refining their business models to stay alive. This had given them the strength to react within ongoing volatile global conditions, Adam said.
‘‘They’ve weathered the huge storms, and they’re now seeing the benefits of the adjustments they’ve made . . . (now) business in New Zealand is being won back from people (clients) who had ordered components in China.’’
The NZMEA had welcomed a recent second cut in the official cash rate by the Reserve Bank, with further such cuts to help solidify the current downward trend in the kiwi dollar.
‘‘We encourage the RBNZ to continue its easing stance, provided risks in the housing market are carefully considered,’’ Adam said.