The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions, completed during April 2017, shows total sales in March 2017 increased 2.93% (year on year export sales decreased by 8.10 percent with domestic sales increasing by 17.95%) on March 2016.

In the three months to March, export sales decreased an average of 9.4%, and domestic sales increased 7.1% on average.

The NZMEA survey sample this month covered NZ$360m in annualised sales, with an export content of 51%.

Net confidence rose to 23, up from 0 in February.

The current performance index (a combination of profitability and cash flow) is at 97, down from 98.3 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 102, up from 100 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 105.33, down on the last result of 106.33. Anything over 100 indicates expansion.

Constraints reported were 78% markets, 11% skilled staff and 11% capital.

A net 38%of respondents reported a productivity increase in March.

Staff numbers increased 4.31% year on year in March.

Supervisors, tradespersons, managers, professional/scientists and operators/labourers reported a moderate shortage.

“Domestic sales lead growth for manufactures in March, increasing an impressive 17.95% on March 2016. Average monthly growth for domestic sales over the last three months was 7.1%. Staff numbers have also picked up, increasing 4.31% on the same month last year, a break from a recent trend of staff number decreases.” Said NZMEA Chief Executive Dieter Adam.

“In contrast, export sales have continued to struggle, falling 8.10% on March 2016, resulting in an average decrease of 9.4% in the past three months.  Exports experienced a monthly average decrease of 4.8% in the last 12 months, compared to the same months in the previous year. Net confidence rose from the neutral position of 0 in February, to a more positive 23, while two out of three index measure (performance and forecast) experienced a slight decrease on last month. Market conditions remained the highest reported barrier to growth, significantly higher at 78% than skilled staff and capital, both at 11%.

“The challenges in export sales in this survey was reflected in the recent Overseas Merchandise Trade release by Statistics New Zealand. Mechanical machinery and equipment export values felt a fall of 6.13% in March on the same month last year, while electrical machinery and equipment experienced a 1.61% decrease in the same period. 

“Exports are an indispensable part of the path to a more prosperous New Zealand. However, the backward movement in exports over the last year presents a real challenge that needs addressing. As the election approaches, we need to see all political parties put ideas forward on how to create an environment where our high value exports can grow and thrive,” said Adam.