Business confidence improving, says new survey

A monthly survey of business conditions has found confidence at its highest level since February 2008, but still in negative territory.

The latest New Zealand Manufacturers and Exporters Association (NZMEA) survey put net confidence at -17 in July, up from -27 a month earlier.

NZMEA chief executive John Walley said the improved rating reflected hope that new orders were more than just restocking.

Low sales numbers were persisting for manufacturers despite an expectation things were starting to pick up, said Walley.

"Lead times remain short and customers are ordering at the last minute increasing uncertainty."

A year ago high volumes had somewhat compensated for margin erosion associated with a high dollar, but now a high dollar with low sales was "really, really hurting".

The survey found total sales during July were down 34 per cent on a year earlier, with export sales down 48 per cent and domestic sales down 7 per cent.

The current performance index (a combination of profitability and cash flow) is at 95, up from the previous month's 91, the change index (capacity utilisation, staff levels, orders and inventories) rose to 97 from 96, and the forecast index (investment, sales, profitability and staff) is at 99, up on the previous month's 96. Anything less than 100 indicates a contraction.

Staff numbers for July were 40 per cent lower than a year earlier.

The NZMEA survey sample covered $330 million in annualised sales, with an export content of 54 per cent.

- NZPA