Manufacturing sales fell last month, and with few forward orders the sector continues to have low confidence, the New Zealand Manufacturers and Exporters Association says.
The association's latest survey of business conditions showed total sales in October decreased 2.7 per cent compared to a year earlier. While export
sales were up 7.9 per cent, domestic sales were down 13.1 per cent.
The survey sample covered $460 million in annualised sales, with an export content of 55 per cent.
Association chief executive John Walley said soft sales domestically and lower growth in exports were cancelling out the benefit of a lower dollar for exporters.
Reports were mixed, with some exporters reporting difficult market conditions, while others were finding sales holding up with a lower dollar helping improve returns.
It was a positive sign that manufacturers and exporters were still hiring staff, in contrast with other sectors of the economy, Mr Walley said.
"This reflects that sales are holding up right now, even though forward orders are slowing. Exporters are also keen to maintain their capacity in case markets improve and they can take advantage of the low dollar.
"The major concern is that predictions for future investment, profitability, turnover and staff are all trending downwards, which makes an export led recovery tenuous. This can largely be attributed to the uncertainty in global markets and the volatility of the exchange rate."
The current performance index (a combination of profitability and cash flow) is at 88.5, down from the previous month's 92.5, with anything less than 100 indicating a contraction.
The change index (capacity utilisation, staff levels, orders and inventories) slipped to 96 from 98, and the forecast index (investment, sales, profitability and staff) is at 92.3, down from 95.
Net confidence in October was at - 82, up from the - 90 result reported in September.
- NZPA
