Exports drive gain in manufacturing sales

The latest survey of manufacturers and exporters shows a slight increase in overall January sales and a 7.3 per cent rise in export sales on the same month last year.

Overall, sales were up 0.93 per cent although domestic sales were down 3 per cent.

The Manufacturers and Exporters Association (MEA) survey of business conditions also showed a lift in confidence on December last year.

Net confidence rose to -54, up from the -73 result reported last month.

However, year on year employment for January fell by 5 per cent among the firms surveyed which between them have turnover of $425 million.

Just on 41 per cent of those firms were exporters.

Association chief executive John Walley said the picture was mixed.

Those involved in the automotive industries and consumer goods supply chains were hit hard, while those in business to business sales, infrastructure and safety gear were doing reasonably well.

"Overall confidence has risen again but it is worth noting there was still very little positive sentiment," he said.

The confidence rating has now been in negative territory for a year, which was a worrying sign given that investment in the tradeable sector was usually the spark to pull the country out of recession.

The January performance index - a combination of profitability and cash flow - was 90.5, down from 96 the month before. Anything under 100 indicates a contraction. The outlook was uncertain, Walley said.

With the lower dollar, exporters were getting larger margins but volumes were dropping. Poor local demand has resulted in reduced domestic sales.

As interest rate cuts, tax cuts and a raft of stimulus measures fed through into the global and local economy, a reset in the minds of consumers was important so that some of the money was spent, rather than being used to retire debt or increase savings, Walley said. "We should be careful of talking ourselves into getting the razor blades out."

Firms had indicated they would be cutting more staff. "This is a concern not only for the short-term, but may also lower production capacity over the medium-term," he said.