'Perfect storm' brewing

Conditions for manufacturing exporters are about as bad as they have been in living memory, with the high exchange rate exacerbating weak overseas and domestic markets, New Zealand Manufacturers and Exporters Association chief executive John Walley says.

Confidence among exporters had turned negative, he said, with a slowdown in orders from Australia adding to weak sentiment from northern hemisphere markets.

Its latest survey shows net confidence in July fell to negative 11, down from the positive 17 net result reported for June. Export sales fell by 0.7 per cent and domestic sales by 5.3 per cent on those reported in July 2011.

Staff numbers for July fell year on year by 1.4 per cent.

"Job losses at Solid Energy and the reduction of milk payouts show the impact of these factors on the export sector," he said. “The continuing decline in staff numbers highlights the lack of investment we have seen for about the last seven years.”

With world markets deteriorating, Australia showing signs of no longer being able to "fill the gap", exchange rates with the United States and Europe prohibitively high, an election slowing orders from the US, and demand in China drying up, Walley said it was the perfect-storm scenario.

Many Canterbury manufacturers were under stress, with some likely to cut staff numbers, he said.

"I think there's a case for the high to be made to print money for Christchurch . . . you spend it into Christchurch for the recovery."

- © Fairfax NZ News