High kiwi concerns exporters
Export manufacturers remain worried about the stubbornly high New Zealand dollar.
The latest New Zealand Manufacturers and Exporters Association survey of business conditions, completed last month, shows total manufacturing sales in April increased 4.93 per cent compared with April last year.
Year-on-year export sales rose 12.83 per cent, with domestic sales decreasing 1.71 per cent on April 2013.
NZMEA chief executive John Walley said the high exchange rate featured in many comments from those surveyed, and the pressure was evident in a market constraint measure increasing to 68 per cent from 53 per cent from the last survey. The effect of the exchange rate on margins was one constraint.
"The cross rate with Australia received special mention by many, cutting margins and increasing competition," Walley said. "The longer this continues, the greater will be the negative impact on future investment, innovation and competitiveness of manufacturers.
"Recent comments by the Reserve Bank of New Zealand suggested they would intervene if the right opportunity arose, although this has yet to eventuate."
The kiwi rose above US85 cents in early trading yesterday and gained ground to nearly A91c Australian cents, significantly stronger than the long-term trend on both cross rates.
The NZMEA survey sample for April covered $440 million in annualised sales, with an export content of 49 per cent.
The current-performance index, a combination of profitability and cashflow, was at 87.7, down from 101.7 in March. Anything less than 100 indicates a contraction.
The change index, made up of capacity utilisation, staff levels, orders and inventories, was at 98, down from 101 in the last survey.
Walley said the survey showed a continuation of a year-on-year decrease in domestic sales, while export sales improved off a low base a year ago.