Skilled staff constraint highest since 2008 - NZMEA Survey - May 2017

13 July 2017

The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions, completed during June 2017, shows total sales in May 2017 decreased 2.34% (year on year export sales decreased by 5.68% with domestic sales increasing by 10.99%) on May 2016.

In the 3 months to May, export sales decreased an average of 14.4%, and domestic sales increased 7.1% on average.

The NZMEA survey sample this month covered NZ$251m in annualised sales, with an export content of 77%.

Net confidence fell to 25, down from 40 in April.

The current performance index (a combination of profitability and cash flow) is at 98.7, up from 97.7 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 104.2, down on the last result of 105.7. Anything over 100 indicates expansion.

Constraints reported were 60% markets and 40% skilled staff.

A net 10% reported productivity improvements in May.

Staff numbers decreased 2.28% year on year in May.

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

“This month’s domestic sales improved on April’s results, showing growth of 10.8% on May 2017. Despite the negative result seen last month, domestic sales have experienced a largely positive growth trend in the last year. In the three months to May, there was an average monthly growth of 7.1% on the same months last year.” Said NZMEA Chief Executive Dieter Adam.

“Export sales, on the other hand, experienced another month of decline, -5.7% on May 2016, reinforcing the general negative trend felt over the last year.  In the three months to May, average monthly sales decreased 14.4% on the same months last year.

“Export sales results were also reflected in the recent Overseas Merchandise Trade numbers from stats New Zealand.  For example in May, both mechanical machinery and equipment and electrical machinery and equipment experienced decreases in export sales values on May 2016.

“Finding skilled staff has become a larger issue for manufacturers in May, with the skilled staff constraint having the highest value since February 2008, at 44%.  It was commented by respondents that tradespeople are of particular need – a sentiment that was shared by a number of companies at a recent NZMEA event with the Prime Minister.

“Industry and Government need to work together to improve our education system and industry training to start to address these skill shortages that hold Kiwi manufacturers back.  This can be done – there are a number of examples around the world of such skill shortages being address effectively, such as Germany.” Said Dieter.