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Business confident even though sales are low

Friday 4th February 2011

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Business is more confident even after reporting a fall in sales in December, according to the latest survey by the New Zealand Manufacturers and Exporters Association (NZMEA).

Businesses surveyed reported export sales decreased by 6% while domestic sales increased by 2% in December 2010, compared to the same month a year earlier. Total sales decreased 0.9%.

Yet net confidence rose to 33, up from 23 last month.

"We have seen a decline in the expansion of sales, year-on-year, since the middle of 2010 and in December 2010 sales are lower than in December 2009," NZMEA chief executive John Walley said.

"Against this there continues to be some pick up in confidence levels and forward expectations. How this will play out remains to be seen."

Staff numbers increased by 2% in December from a year earlier. Walley said some businesses were finding it difficult to find skilled staff.

The current performance index was little changed at 102.5, compared with 102 in November. Anything more than 100 indicates an expansion.

Walley said there was very little investment in capacity expansion. Firms were only replacing failing equipment or bringing previously contracted work in house.

"The major reasons for this are uncertainty around how the global economy will fare this year and more importantly whether the exchange rate will remain at its elevated levels in the United States and Europe," he said.



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