Manufacturing sector's 'nostrils just above the water line', analyst says

The country's manufacturing sector is only just keeping its head above water, according to an analyst, with some businesses saying the Government is compounding its problems. 

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But Winston Peters is pooh-poohing firms’ negativity. Source: 1 NEWS

Martin Simpson of Fraser Engineering, which manufacturers fire engines, said Government policies were impacting business, and finding skilled labour was a "big problem". 

"I have absolutely no doubt that the costs imposed upon all business through the country are going through the roof," he said. "You know there's huge pressures on wages."

He also said that, over years, Government has "created a huge mess" when it comes to apprenticeship schemes. 

Manufacturing New Zealand's Catherine Beard said the feedback the organisation has received is that the skills shortage has been a "big drag" on the ambition of businesses. 

According to the BNZ - BusinessNZ Performance of Manufacturing Index, the manufacturing sector had picked up slightly in June - but it was still the fourth consecutive monthly result below the longterm average. 

June had a result of 51.3 - above 50.0 indicates manufacturing is expanding, while below 50.0 it is declining. The longterm average sits at 53.4.

BNZ Senior Economist Craig Ebert said the recent employment statistics of manufacturing yielded results that were "spookily Great Financial Crisis-like". 

However, he said hiring expectations rebounded to an encouragingly positive level.

He described the Performance of Manufacturing Index as "doing doggy paddle" with its "nostrils just above the water line".

The latest NZIER Quarterly Survey of Business Opinion also found business confidence fell to the lowest level since March 2009. However, "we might have slower growth, but the bills are being paid a little bit quicker", economist Cameron Bagrie said recently on TVNZ1's Q+A.

"One of the big reasons the economy has slowed up is because of capacity. The unemployment rate is in the low fours. You talk to any firm out there across New Zealand at the moment – what’s their biggest economic problem? It's finding skilled staff," he said. 

National finance spokesperson Paul Goldsmith said employers were more likely to invest in new employees "if they feel confident about the economy and the direction its heading".

"Essentially, it's about this Government adding a lot of costs, creating a lot of uncertainty and demonstrating incompetence in many areas," he said. 

Acting Prime Minister Winston Peters said the Government would "carry on doing our job and ignore the doomsday merchants".

"I'm not worried about a survey that includes 500 businesses when there are 500,000 businesses in this country and where nearly every indicator, the share market is at record levels, profitability is up at record levels, baking profits are up at 9 per cent... So let's not have this doom and gloom contrived by the National Party."