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Manufacturing confidence hit in September
Manufacturing confidence hit in September

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during October, shows total sales in September decreased 6.72% (year on year export sales decreased by 11.72% with domestic sales increasing by 17.12%) over September 2015.
In the three months to September, export sales decreased an average of 7.0%, and domestic sales increased 5.2% on average.

The NZMEA survey sample this month covered NZD276m in annualised sales, with an export content of 78%.
Net confidence fell to -23, down from 22 in August.
The current performance index (a combination of profitability and cash flow) is at 94.3, down from 100.7 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 99, down from 101 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 102.33, down on the last result of 109.2. Anything over 100 indicates expansion.

Constraints reported were 77% markets, 15% skilled staff and eight percent capital.
There was no net reported productivity increase for September.
Staff numbers decreased 2.81% year on year in September.
Supervisors, tradespersons, managers, professional/scientists and operators/labourers reported a moderate shortage.
“Coming off the solid increase in export sales felt in August, year on year export sales in September moved back into negative, showing an 11.72% fall on sales in September 2015.  This lead to an average monthly decrease of 7 percent of export sales in the three months to September – extending this out to over the last 12 months gives an average export sales growth of 0.8%,” said NZMEA chief executive Dieter Adam.

“The majority of manufacturing sales reported in September came from exports, at a reported 78% of total sales from respondents.  September domestic sales in comparison to exports saw increases on the previous year.  Domestic sales increased 17.12% on September 2015. This gave an average increase of 5.2% in the three months to September, and 3.7%over the last 12 months.

“Last month’s increase in confidence was reversed, with net confidence down to -23 in September.  This was the first time net confidence has been negative since May 2015, and the lowest result since March 2014.
“The fall in confidence was accompanied by reductions in all three index measures.  The performance index fell back into contraction at 94.3, the lowest level since March 2015.  The forecast index fell back on the highs felt last month, but remained in expansion at 102.33, while the change index move down to 99, from 101 in August.

“These results in September do show some contrast with other measures, such as the PMI, which moved higher in September from August.  Domestic sales are more consistent with the PMI.  Some of the decline in exports we observed may be explained by lumpy sales month by month, but when paired with the lower confidence and index measures, it does suggest some challenges hitting export sales in September.  The currency has fallen back from highs, but remains at a level where it is adding pressure on exporters and import competition manufacturers.” 

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