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A survey of Canterbury manufacturers has found that despite the strength of the New Zealand dollar, export sales are ahead of last year.
Gloom about the country's manufacturing sector was highlighted last week by Fisher & Paykel Appliances' announcement it was moving some operations to Thailand, with the loss of 350 jobs in Auckland.
That announcement came within hours of the Reserve Bank lifting official interest rates a quarter of a percentage point, following a similar hike in March, taking the rate to 7.75 per cent.
The Canterbury Manufacturers' Association (CMA) monthly survey found the total sales among manufacturers surveyed in March were up 6.7 per cent on the same month a year earlier.
Export sales were up just under 5.8 per cent, with domestic sales increasing around 7.5 per cent.
The survey sample this month reported $470 million in annualised sales, with an export content of 44 per cent, CMA said.
Net confidence was recorded at -8, a decrease from the February result which was zero.
The current performance index which combines profitability and cash flow is at 94, up from the previous month's 93.
Anything less than 100 indicates a contraction.
The change index, covering capacity utilisation, staff levels, orders and inventories, dropped to 99 from 100 on the previous month.
The forecast index, including investment, sales, profitability and staff increased to 102 from 101 in February.
Chief executive John Walley said that while the sales numbers suggested things for manufacturers were not that bad at present, looking deeper the performance index indicated the impact of the ongoing strength of the NZ dollar.
Some companies reported demand was holding up and their factories were busy but returns were falling.
"Manufacturers are living off their balance sheets; it can't go on forever," Mr Walley said.
The full impact of recent and anticipated announcements had not yet become visible.
The 350 jobs at F&P would have a much larger fallout in their supply chains, with some estimates that as many as 1500 jobs dependent on F&P will be lost.
- NZPA
