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.
For results table and historical series, click here.
Rick Smith, Operations Manager of Sutton Tools (NZ), has been elected as the New Zealand Manufacturers and Exporters Association (NZMEA) President at the Association’s 137th AGM. Rick takes over the helm from Tom Thomson, who completed his two year term as President, say the New Zealand Manufacturers and Exporters Association (NZMEA).
The office holders of the NZMEA are now: President: Rick Smith, Operations Manager, Sutton Tools (NZ) Ltd. Senior Vice President: Trevor Edwards, Managing Director, Superheat Ltd. Junior Vice President: Greg Thompson, Chief Executive, Footscience Intnl Ltd. Immediate Past President: Tom Thomson, Managing Director, EPL.
NZMEA Chief Executive Dieter Adam says, “I would like to express gratitude to Tom Thomson for his two years of service as President of the NZMEA. Tom has shown extraordinary dedication and put a significant amount of time and effort into a range of activities within his term.
“We are pleased to have Rick Smith move into the role of President, and are excited to keep working to represent and advocate for manufacturers and exporters under his leadership." said Dieter.
President Rick Smith said, “I am looking forward to being in the role of President of the NZMEA. The Association has a long history of serving the needs of New Zealand manufacturers. These are challenging times for manufacturers and exporters and we will continue to support our members with representation, training and advice. We are committed to raising the awareness of the importance of manufacturing for New Zealand’s long term future and will continue our role as a voice for manufacturers across the country.”
Past President Tom Thomson said, “I am proud of the progress we have made in the last two years. There have been some improvements for manufacturers and exporters generally, with many reporting better sales and outcomes than in previous years. However, we still face a number of challenges and uncertainties looking forward - I am confident the NZMEA will continue its work to improve conditions for manufacturers and exporters. New Zealand has to create a more productive and high value economy, with a strong manufacturing base providing well paid jobs and export income, to truly raise living standards for Kiwi’s.”
NZMEA Chief Executive Dieter Adam says, “The exchange rate remains overvalued, adding significant pressure to manufacturing and exporting businesses, hitting margins and competitiveness, both in our vital export markets such as Australia, and for those competing against imports in New Zealand.
“We need to see the downward correction of our currency restart. The longer it remains significantly overvalued, the bigger its effect will be on manufacturers and exporting businesses, hitting their ability to invest in the future, through R&D, new equipment and staff. New Zealand manufacturers operate against global competitors, and this investment is vital to ensure we remain competitive and productive into the future.
Looking towards the Reserve Bank of New Zealand’s (RBNZ) OCR decision tomorrow, the exchange rate remains at a level that is putting a lot of pressure on manufacturers and exporters. Building financial stability issues, here and abroad also present a significant future risk, say the New Zealand Manufacturers and Exporters Association (NZMEA).
NZMEA Chief Executive Dieter Adam says, “The exchange rate remains overvalued, adding significant pressure to manufacturing and exporting businesses, hitting margins and competitiveness, both in our vital export markets such as Australia, and for those competing against imports in New Zealand.
“We need to see the downward correction of our currency restart. The longer it remains significantly overvalued, the bigger its effect will be on manufacturers and exporting businesses, hitting their ability to invest in the future, through R&D, new equipment and staff. New Zealand manufacturers operate against global competitors, and this investment is vital to ensure we remain competitive and productive into the future.
“We would encourage the RBNZ to continue moving the OCR downward and closer to rates seen in the rest of the world, to spur inflation to the target range and help our currency move along a downward path.
“However, we face a potentially much bigger threat from growing financial stability risks, both in New Zealand and globally. New Zealand’s debt-to-income ratio has now reached levels higher than before the GFC – sitting at 165%, which is significantly higher than a year ago at 159%. This build-up of private debt leaves New Zealand more exposed to global risks, as well as increasing the potential for disturbance in our housing market. This is not an abstract threat to our economy, it is a tangible threat to many New Zealand households exposed to debts they may no longer be able to service if economic conditions change, be that a loss of an income, or an increase in interest rates on their debt.
“We know from experience during the GFC, the large effect such crisis can have on all parts of our economy, especially our manufacturing sector where many rely on export income. In our NZMEA survey, export sales made up 60% of sales for respondents in July.
“The RBNZ should continue their work on shoring up our financial system against potential stability threats and expand their tool-set of macro-prudential tools, including exploring debt-to-income limits on property lending.
“It is worth remembering that RBNZ’s responsibilities currently are inflation management and financial stability. The responsibility for rising housing costs lies with the Government.
“It is important that the work on housing continues, to give the RBNZ the freedom to deal with inflation, stability and the resulting exchange rate. There has been progress on the supply side, with the Auckland Unitary Plan, however, there are still additional measures that could be undertaken on the demand side of the equation. “Says Dieter.
Today’s Auckland mayoralty debate covered a range of issues, but completely missed any discussion on Auckland’s productive industry, jobs and wealth creation, say the New Zealand Manufacturers and Exporters Association (NZMEA).
NZMEA Chief Executive Dieter Adam says, “The lack of discussion on wealth creation and building an environment for productive businesses to succeed is a concern for manufacturers - this is an issue that needs to be part of the debate both at local and central government levels.
“We need real discussion and vision for how to create an environment that supports sustainable growth in productive businesses, both in Auckland and across the country, to provide the growth, exports and well-paid employment we need.
“Auckland is home to about a third of our population, makes up about 36% of national GDP and manufacturing makes up over 11% of Auckland’s GDP. What happens there has ramifications for New Zealand as a whole.
“However, the economic performance of Auckland, in terms of GDP-per-capita growth, has not been spectacular, particularly when compared to other cities are around the world. We need to see a real focus at both the local and national government level on how to create more growth in productive businesses, particularly those in manufacturing and exporting.
“There was some quality discussion on the issue of housing, which effects all people in the city as well as the businesses who employ them. We are continuing to hear comments from manufacturers who are finding it increasingly hard to find and retain good skilled staff with the cost of housing in suitable areas rising at current rates. The same is true for transport infrastructure, where it is increasingly hard for workers to get to their place of work every day. Both these issues are adding to the existing problem of our education system not providing the flow of skilled people manufacturers need to grow and expand.
“As we have heard from Auckland company F&P Healthcare’s Managing Director Lewis Gardon recently, for example, currently a combination of the above factors and the high New Zealand dollar creates a disincentive for investment in manufacturing in Auckland. Without a plan for how to address these issues, this does not bode well for the city’s future.” says Dieter.
The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during August 2016, shows total sales in July 2016 decreased 15.27% (year on year export sales decreased by 20.48% with domestic sales decreasing by 6.03%) on July 2015.
In the 3 months to July, export sales decreased an average of 6.5%, and domestic sales increased 2.6%.
The NZMEA survey sample this month covered NZ$337m in annualised sales, with an export content of 60%.
Net confidence fell to 6, down from 20 in June.
The current performance index (a combination of profitability and cash flow) is at 98.7, down from 99 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 100, up from 99 in the last survey, and the forecast index (investment, sales, profitability and staff) is at 107, up on the last result of 105.33. Anything over 100 indicates expansion.
Constraints reported were 75% markets, 12.5% production capacity and 12.5% capital.
There was no net reported productivity increases for July.
Staff numbers for July decreased 0.15% year on year.
Supervisors, tradespersons and, managers, professional/scientists and operators/labourers reported a moderate shortage.
“Year on year export sales have moved from their slight fall last month, to a more significant decrease of 20.48% in July. This result solidified the downward trend shown in the 3 month moving average of export sales, now sitting at -6.5%. Domestic sales also fell in year on year terms, though to a smaller extent than exports. Year on year domestic sales fell 6.03% in July, resulting in monthly average growth of 2.6% for domestic sales over the last 3 months.” Said Dieter Adam.
“There are clearly some challenges appearing in sales terms for manufacturers, particularly in export markets. The profitability measure gained ground in the latter half of 2015, but has since been trending downward. After moving somewhat lower during 2016, the market constraint has now moved to its highest level since December 2015. This may indicate, along with falling the profitability and export sales, that the pressure of the exchange rate is building on manufacturers – our currency has trending up this year, moved up 9 cents since late 2015 on the Trade Weighted Index. The exchange rate and increased competition from imports was noted as a concern by a number of respondents.
“Confidence fell in July, along with two of the index measures, profitability and change. However, in contrast, the forecast index increased again on last month, and remains high at 107. Within the forecast index, was a strong positive result for investment plans. Despite this month’s sales results, and lower confidence, there remains a relatively positive view for the future among manufacturers.” Said Dieter.
For results table and historical series, click here.
The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during July 2016, shows total sales in June 2016 decreased 0.43% (year on year export sales decreased by 0.53% with domestic sales decreasing by 0.17%) on June 2015.
For results table and historical series, click here.
In the 3 months to June, export sales decreased an average of 1.5%, and domestic sales increased 5.5%. The NZMEA survey sample this month covered NZ$305m in annualised sales, with an export content of 70%. Net confidence fell to 20, down from 33 in May.
The current performance index (a combination of profitability and cash flow) is at 99, down from 102 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 105.33, up on the last result of 104. Anything over 100 indicates expansion.
Constraints reported were 53% markets, 33% production capacity and 13% skilled staff. A net 20% of respondents reported productivity increases for June. Staff numbers for June increased 0.17% year on year.
Supervisors, tradespersons and, managers, professional/scientists reported a moderate shortage and operators/labourers reported a minor shortage.
“Year on year export sales experienced a slight fall, after a modest increase in May, leading to an average monthly fall of 1.5% in the last 3 months. Domestic sales are flat in June, though significantly lower than the nearly 14% year on year increase last month that led growth for manufacturers. These results gave a monthly average growth of 5.5% for domestic sales in the last 3 months.” Said Dieter Adam.
“The index and sentiment measures this month show some falls on last month, with the confidence measure down from 33 to 20, and both the performance and change index moving into contraction. However, in contrast to this, the forecast index moved even higher than last month, staying in expansion. Despite current pressure on sales and sentiment, manufacturers still have a positive expectation of the future – hopefully this eventuates into stronger sales results throughout the rest of 2016.
“Production capacity is becoming more of an issue for manufacturers, with the constraint reaching the highest level since February 2015. The market constraint increased on last month – the currency remains overvalued and well above expectations.
“It was great to see the Reserve Bank of New Zealand (RBNZ) propose more lending limits in the housing market to promote financial stability against building private debt, and the Auckland Unitary Plan appears to be a solid step forward needed to increase the supply of housing. We hope this gives the RBNZ the confidence to follow through on their talk and start to move our exchange rate on the much needed downward correcting trend.
“There were also a number of comments regarding challenges competing with low cost, low quality imports into New Zealand, which may be adding to pressure on domestic sales. As we have seen in the steel industry, this is an area which needs to be watched to ensure Kiwi consumers are protected and manufacturers are operating in a fair environment.“ said Dieter.
Manufacturers are pleased with today’s announcement by James Shaw and the Green Party to include a Minster for Manufacturing in any future cabinet. This is a vital step for ensuring government understands manufacturing and can effectively help unleash the potential of the sector. This is a solid idea that we hope can be embraced by any and all political parties, say the New Zealand Manufacturers and Exporters Association (NZMEA).
NZMEA Chief Executive Dieter Adam says, “Manufacturing remains one of the biggest providers of quality jobs with wages higher than the average, economic growth and export income into New Zealand. Yet manufacturing has been undervalued and not well understood by governments for a long time – this is a stark contrast to the focus and representation most other sectors find within government.
“When we consider the importance of manufacturing to New Zealand’s future, introducing a Minister for Manufacturing is a common sense decision. This will help government and manufacturing businesses better work together to achieve our goals of sustainable high-value growth, increased export income and more well paid jobs for our people.
“A specific focus on manufacturing and industry in government is an idea that is being increasingly embraced by governments around the world. The new UK Prime Minister has introduced a new industrial strategy, as well as the U.S, Australian and German Governments all putting considerable effort into strategy’s to understand and improve their high-value manufacturing sectors into the future. New Zealand cannot stand idle while our competitors take manufacturing seriously.
“Manufacturing also faces significant changes in the future that will act as threats, as well as huge opportunities for New Zealand if we can get ahead, such as Industry 4.0, automation and other technologies like 3D printing. A more focused view of manufacturing, through a Minister for Manufacturing, will help develop more effective responses to these changes.” says Dieter.
An MZMEA press release
Manufacturers and exporters welcome the Reserve bank of New Zealand’s (RBNZ) proposed expansion of existing Loan to Value Ratios (LVR) today – this should give them more freedom to address continued low inflation and an exchange rate that remains overvalued and challenging for exporters, say the New Zealand Manufacturers and Exporters Association (NZMEA).
NZMEA Chief Executive Dieter Adam says, “We are pleased to see this action from the RBNZ to continue to sure up the financial system against stability risks in the housing sector. We also support their efforts to look into other measures, such as Debt to Income Ratios, as another tool to protect financial stability.”
“We hope this moves gives the RBNZ more certainty to push forward with cuts to our interest rates to better align them with those in the rest of the world. Inflation remains below target and our exchange rate continues to be overvalued, well above forecasts and the Bank’s own targets – prolonged currency pressure on exporters damages their competitiveness and reduces their ability to make much needed investments for the future.
“However, we know from recent experiences that LVR limits only have a limited and temporary effect on house prices. Rising house prices and rental costs are increasingly becoming an issue for employers, including manufacturers, especially in Auckland. We increasingly hear from our members about people looking at jobs in other cities where their salary would go a lot further – adding to an already serious problem of attracting and retaining skilled workers nationwide, but especially in Auckland.
“Keeping house prices and rents in check is first and foremost the responsibility of central and local government. Government needs to find ways to boost the supply of affordable housing in areas suitable for working people, as well as tackling migration-driven demand spikes and some of the longer term tax incentives that encourage investment in existing housing stock over more productive investment. We should let the Reserve Bank focus on getting inflation in line and ensuring financial stability in our banking system, rather than overloading it with demands and expectations to influence developments beyond its current mandate.” says Dieter.
An NZMEA press release Tuesday 19 July 2016
The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during June 2016, shows total sales in May 2016 increased 5.37% (year on year export sales increased by 1.43% with domestic sales increasing by 13.87%) on May 2015.
For results table and historical series, click here.
In the 3 months to May, export sales increased an average of 0.5%, and domestic sales increased 3.9%.
The NZMEA survey sample this month covered NZ$347m in annualised sales, with an export content of 66%.
Net confidence fell to 33, down from 40 in April.
The current performance index (a combination of profitability and cash flow) is at 102, up from 99 last month, the change index (capacity utilisation, staff levels, orders and inventories) was at 101, no change from the last survey, and the forecast index (investment, sales, profitability and staff) is at 104, up on the last result of 102. Anything over 100 indicates expansion.
Constraints reported were 44% markets, 28% production capacity, 17% skilled staff, and 11% capital.
A net 22.22% of respondents reported productivity increases for May.
Staff numbers for May increased 0.73% year on year.
Supervisors, tradespersons, managers, professional/scientists reported a moderate shortage and operators/labourers reported a minor shortage.
“May’s export sales moved back into year on year improvements, however modest, after a fall last month. On the 3 month average measure, exports remained slightly positive at 0.5%. Domestic sales showed a large year on year increase, 13.87% in May, a significant improvement on the 2.72% increase last month, and the year on year fall seen in March. May’s improvement moved the 3 month average up to 3.9%.” says Dieter Adam, Chief Executive of the NZMEA.
“The performance, forecast and change indexes all reported increases on April’s result and all were in expansion – manufacturers continue to implement changes and improvements in their businesses. However, the capital constraint was reported at the highest level since September 2014.
“Brexit has added more uncertainty into global markets, and has had immediate effects on our exchange rate, but the longer term effects are yet to be seen – in times of uncertainty orders can become more cautious, which could hit some New Zealand exports into the UK and EU.
“The currency continues to be reported as a risk in comments – our dollar has increased more than 5 cents on the Trade Weighted Index in the last month, to over 77. This is also about 5 cents above the level the RBNZ was forecasting for June in their last Monetary Policy Statement.
"We have now hit record highs against the British Pound, and our currency has gained significant ground against the Australian dollar, now sitting at very challenging levels for exporters. We need to see action from the Reserve Bank of New Zealand (RBNZ) to bring down our overvalued currency, in conjucntion with restrictions on housing investor lending and additional measures from Government to relieve the housing pressure that is tying the RBNZ's hands." said Dieter.
For further comment contact Dieter Adam, 027 495 3276.
The New Zealand Manufacturers and Exporters Association survey gathers results from members around New Zealand. It provides a monthly snapshot of manufacturers and exporters’ sales and sentiment.
Palace of the Alhambra, Spain
By: Charles Nathaniel Worsley (1862-1923)
From the collection of Sir Heaton Rhodes
Oil on canvas - 118cm x 162cm
Valued $12,000 - $18,000
Offers invited over $9,000
Contact: Henry Newrick – (+64 ) 27 471 2242
Mount Egmont with Lake
By: John Philemon Backhouse (1845-1908)
Oil on Sea Shell - 13cm x 14cm
Valued $2,000-$3,000
Offers invited over $1,500
Contact: Henry Newrick – (+64 ) 27 471 2242