Canterbury manufacturers show zero confidence

By NZPA

Tuesday 2nd July 2002

Confidence has plummeted among Canterbury manufacturers to the lowest levels in a year, according to the region's monthly sector survey.

Net confidence dropped to zero over the last year, the Canterbury Manufacturers' Association said in a statement.

A poll of members showed 29 percent had a positive outlook in May.

Other June figures were not available but May figures showed that over the last year sales had fallen around 10 percent, domestic sales were back around the same level and exports were down about 9 percent.

In April exports were up 24 percent on a year-on-year basis.

The association's chief executive, John Walley, said falling sales and wider concerns about interest and exchange rates had rattled manufacturers' confidence.

He felt growth was now officially under threat.

"From two of our last three surveys, I think we can safely conclude that confidence has dived. Direct negative comments and the survey are now pretty much in line. It is probably too early to say the pessimism is solid, but certainly the absence of confidence is firm."

Mr Walley said the kiwi's improving cross rate against the Australian dollar had played a particularly vital role, as Australia still represented the major market for manufacturing exports.

Staff numbers continued to rise and were up around 2 percent on the same period last year. But all future indicators including staff, investment, sales and profitability had turned "sharply negative".

Manufacturers identified market conditions as the main constraint to growth, four times more so than the next constraint of productive capacity.

Staff shortages were a problem for around 10 percent of respondents and capital was not considered an obstacle at all.

The strong appreciation of the New Zealand dollar was the biggest change since the last survey but it had been offset by rises in local body rates, electricity prices and interest rates.

"We need to build confidence if people are to take the necessary risks to grow," said Mr Walley. "One way or another, a lack of confidence will result in lower growth."

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