Canterbury suffers loss of confidence

Manufacturer confidence in Canterbury dropped in October to its lowest level in more than a year, a survey shows.

The Canterbury Manufacturer's Association (CMA) survey showed net confidence - the difference between optimists and pessimists - slipped to zero from 7 per cent last month, the lowest level recorded since August 2003.

Total sales reported by survey respondents rose 9 per cent on a year ago, as a 19 per cent rise in export sales outstripped a 2 per cent rise in domestic sales.

"Overall sales are strong, margins are thin, and confidence is bleeding away even in the face of some improved returns from sales in Australian dollars," said CMA chief executive John Walley.

The kiwi dollar has fallen 3.6 per cent against the Australian dollar since touching a nine-year high of 94.91Ac on September 9.

Leading indicators for profits, sales, investment and staff continued the downward trend evident for most of 2004.

"Increasingly, the market is being identified as the major constraint by our survey; this indicates that local firm issues - staff, capacity and capital - are fading as conditions in the wider economy and market weaken," Walley said.

About 76 per cent of respondents identified "market conditions" as a major constraint, while capacity was the main problem for 18 per cent and finding staff an issue for 6 per cent.

- REUTERS