'Flat' sales picture doubted

By JIM EAGLES

Sales were flat during the December quarter, according to official manufacturing statistics released yesterday - but economists do not believe they show the true picture.

Statistics New Zealand's economic survey of manufacturing records a seasonally adjusted fall in sales of 0.9 per cent from the previous quarter.

Even adjusted to remove the effect of price rises, the figures point to a minimal increase of 0.1 per cent.

If correct, that would be just the sort of indicator of economic slowdown that might convince the Reserve Bank to bring forward a cut in interest rates.

But Craig Ebert, treasury economist with the Bank of New Zealand, said he believed the figures had been distorted by changes to the way dairy manufacturing was recorded.

"I'm suspicious of reading that manufacturing has stalled," he said.

"[That is] because other manufacturing statistics for the quarter look quite good."

Darren Gibbs, senior economist with Deutsche Bank, noted that if meat and dairy manufacturing was removed, the increase in real sales for the quarter was 0.3 per cent, "which is quite reasonable".

Furthermore, that December quarter rise brought the increase for the full year to 6 per cent, "which in current global terms is a pretty good performance".