Back to Growth in August

14 October 2016

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during September 2016, shows total sales in August 2016 increased 8.65% (year on year export sales increased by 11.32% with domestic sales increasing by 4.49%) on August 2015.

In the 3 months to August, export sales decreased an average of 3.2%, and domestic sales decreased 0.6% on average.

The NZMEA survey sample this month covered NZ$314m in annualised sales, with an export content of 62%.

Net confidence rose to 22, up from 6 in July.

The current performance index (a combination of profitability and cash flow) is at 100.7, up from 98.7 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 101, up from 100 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 109.2, up on the last result of 107. Anything over 100 indicates expansion.

Constraints reported were 67% markets, 11% production capacity, 11% skilled staff and 11% capital.

A net 33% of respondents reported productivity increases for August.

Staff numbers for increased 4.72% year on year in August.

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

“August has seen export sales bounce back into year on year growth of 11.32%, after two months of sales decreases, resulting in an average monthly fall of 3.2% in the three months to August. This is positive to see, particularly after the low result of -20.48% fall in year on year export sales in July. Domestic sales also showed improvement, after being relativity flat for most of 2016, growing 4.49% in August. Domestic sales decreased an average of 0.6% in the three months to August.” Said Dieter Adam.

“Manufacturers felt a boost in confidence in August, up to 22 from 6 in July, as well as increases across all three indexes measures, performance, change and forecast. The forecast index has hit the highest result seen since May 2004 – suggesting that looking forward, manufacturers and exporters are feeling confidence about the future, despite the ongoing global uncertainty. Within this measure, a net 72% of respondents are expecting a rise in their investment in plant and equipment in the next 12 months, and a net 72% are expecting a rise in average wages.

“Staff numbers in August increased 4.72% compared to the same month last year. This was the largest increase in staff numbers felt since June 2014.

“In terms of constraints on growth, market conditions remain the largest reported constraint, at 67% - this is slightly down on the 75% seen in July. This reflects the exchange rate level remaining at an overvalued position and continued uncertainty in some export markets.” Said Dieter.