Economic Survey of Manufacturing: December 2009 quarter

All references to sales movements are seasonally adjusted unless otherwise stated.

All manufacturing industries

The volume of manufacturing sales rose 3.1 percent in the December 2009 quarter, following a fall of 1.7 percent in the September 2009 quarter, when a nine-year low was reached. Eleven industries, including the influential meat and dairy product manufacturing industry, showed rises for the latest quarter, while four showed falls.

The main changes were:

• meat and dairy product manufacturing, up 4.6 percent
• other food manufacturing, up 5.8 percent
• basic metal manufacturing, down 18.5 percent
• structural, sheet, and fabricated metal product manufacturing, up 7.9 percent.

Volumes are calculated by removing the effect of price changes from values. Indirect seasonal adjustment (whereby component industries are individually adjusted before being summed) is used at the total manufacturing level, while direct seasonal adjustment is used for the meat and dairy product manufacturing industry and for all manufacturing excluding meat and dairy product manufacturing. Volume movements for these sub-totals are therefore not additive at the total manufacturing level.  

 

The value of sales rose 0.7 percent ($139 million) in the December 2009 quarter, following four consecutive quarterly falls. The rise for the latest quarter is smaller than that for the volume because of price decreases.

Nine industries showed rises for the latest quarter, while six showed falls. The main industry movements were:

• basic metal manufacturing, down 19.1 percent ($128 million)
• meat and dairy product manufacturing, down 2.1 percent ($113 million)
• other food manufacturing, up 4.4 percent ($99 million)
• structural, sheet, and fabricated metal product manufacturing, up 7.8 percent ($89 million).

 

The trend for the sales volume, revised from the previous release, is up for the latest two quarters after seven quarters of decline, while the trend for the sales value is down for the fifth consecutive quarter.

Stocks of finished goods, which are not seasonally adjusted, are up 2.0 percent in volume for the December 2009 quarter compared with the December 2008 quarter. Stock values, at $7.9 billion, are down 14.2 percent ($1.3 billion) from the December 2008 quarter, with meat and dairy product manufacturing (because of lower prices overall) being the main cause of the fall.

 

All manufacturing excluding meat and dairy product manufacturing

The volume of sales, excluding meat and dairy product manufacturing, rose 3.6 percent in the December 2009 quarter. This follows a rise of 0.5 percent in the September 2009 quarter and falls totalling 16.6 percent for the previous six quarters.

As detailed in the previous section, most industries showed rises for the latest quarter. Other food manufacturing, and structural, sheet, and fabricated metal product manufacturing were the main contributors to the latest rise, while basic metal manufacturing showed the largest fall.

 

The value of sales rose 3.1 percent ($404 million) in the December 2009 quarter. This follows five consecutive quarterly falls totalling 11.5 percent. As detailed in the previous section, the largest rises in sales value for the latest quarter were for other food manufacturing, and structural, sheet, and fabricated metal product manufacturing, while the largest fall was for basic metal manufacturing. These are the same industries that had the largest changes in sales volume.

The trend for the sales volume, revised from the previous release, shows rises for the latest two quarters, while the trend for the sales value is up after five quarters of decline.

The volume of finished goods stocks, which is not seasonally adjusted, is down 11.4 percent for the December 2009 quarter compared with the December 2008 quarter. The value, at $4.9 billion, is down 12.7 percent.

 

Meat and dairy product manufacturing

Most dairy industry values in this survey are compiled on a non-standard quarter. The data has a one-month lag which means, for example, that the December quarter includes values for the months of September, October, and November. Monthly data is now available, and when there is a substantial time series and a new seasonal pattern can be established, dairy industry data (combined with the meat industry) will be published on a standard quarter (such as October–December).

The volume of sales for the meat and dairy product manufacturing industry rose 4.6 percent in the December 2009 quarter, following a fall of 6.1 percent in the previous quarter. Milk powder, butter, and cheese export quantities fell 6.1 percent in the December 2009 quarter, while meat and edible offal export quantities rose 14.5 percent, as published in the Overseas Merchandise Trade: December 2009 release. Over half of meat and dairy production is exported but timing and valuation differences between sales volumes and export quantities can impact on comparisons of movements.

 

Despite the 4.6 percent rise in volume, the value of sales fell 2.1 percent in the December 2009 quarter because of overall price decreases. This follows a fall in value of 15.4 percent in the September 2009 quarter.

The trend for the sales volume, revised from the previous release, shows falls for the latest two quarters. The trend for the sales value, which includes the impact of price falls, shows a decline in each of the latest three quarters.

The volume of finished goods stocks, which is not seasonally adjusted, is up 31.2 percent for the December 2009 quarter compared with the December 2008 quarter. The value, at $3.1 billion, is down 16.5 percent.

 

Other food manufacturing

This industry includes the processing or production of seafood, fruit and vegetables, animal and bird feed, bread, cereals and baking mixes, cakes and pastry, oils and fats, flour, confectionery, biscuits and sugar.

The volume of sales for this industry rose 5.8 percent in the December 2009 quarter, following smaller rises in the previous two quarters.

  

The value of sales rose 4.4 percent in the December 2009 quarter, following a rise of 1.1 percent in the September 2009 quarter. The latest rise in value is less than that recorded for the volume, implying that the rise was volume-driven while prices decreased.

The trend series for both the sales volume and the sales value show rises for the latest two quarters.

The volume of finished goods stocks, which is not seasonally adjusted, is down 1.5 percent for the December 2009 quarter compared with the December 2008 quarter. The value, at $730 million, is flat.

Basic metal manufacturing

The basic metal manufacturing industry includes the manufacture of iron and steel, basic non-ferrous metals, and non-ferrous basic metal products. Sales for this industry have an unstable seasonal pattern, so are not seasonally adjusted.

The (unadjusted) volume of sales fell 18.5 percent in the December 2009 quarter, reversing the rise of 21.5 percent in the September 2009 quarter. The series is at a historically low level.

 

The (unadjusted) value of sales fell 19.1 percent in the December 2009 quarter, providing the largest negative contribution to the change in total manufacturing sales. This follows a rise of 14.6 percent in the September 2009 quarter. Both these quarterly changes were volume-driven.

The trend series for both the sales volume and sales value show falls in the latest two quarters.

The volume of finished goods stocks, which is not seasonally adjusted, is down 22.5 percent for the December 2009 quarter compared with the December 2008 quarter. The value, at $168 million, is down 24.0 percent. 

Revisions

Amended data received from respondents has resulted in revisions for the following industries for the September 2009 quarter:

• other food manufacturing
• petroleum and industrial chemical manufacturing
• transport equipment manufacturing
• machinery and equipment manufacturing.

The main changes to unadjusted sales values are in the following table.

 

Measurement errors

The Economic Survey of Manufacturing applies imputation methods for estimating values for small firms and non-response, and, like all statistical surveys, is subject to measurement errors, including sample errors and non-sample errors. These measurement errors affect the accuracy of the published statistics. For more information on measurement errors, please refer to the technical notes of this release.

Sample errors

The postal survey was designed to give statistics at the following levels of accuracy (at the 95 percent confidence interval limit):

• 5 percent for sales, salaries and wages, and value added at the total manufacturing level
• 10 percent for sales, salaries and wages, and value added at the published industry level, where value added is calculated as follows:

value added = sales – purchases + stock change

This means, for example, that there is a 95 percent chance that the true value of total manufacturing sales lies within 5 percent of the published estimate.

Sample errors, at the 95 percent confidence interval limit, are calculated each quarter for absolute values and for changes in value from the previous quarter. 

Industries with zero sample error are full-coverage industries. In these industries, all large firms are surveyed and all small- to medium-sized firms are modelled using administrative data from Inland Revenue.

Imputation

Small firms

Small- to medium-sized firms are generally not surveyed. Their variables are instead modelled from administrative data from Inland Revenue. Ratios calculated from the postal sample responses are applied to the administrative data to provide estimated values.

Non-response imputation

Although attempts are made to achieve a 100 percent response rate, in practice this does not occur. Values for non-responding businesses are estimated using a range of methods, including:

• regression imputation
• historic imputation
• mean imputation.

Regression imputation involves estimating the variable of interest from the unit's administrative data (GST sales), based on the relationship shown by similar businesses. Historic imputation involves multiplying their response in the previous period by a non-response factor. The non-response factor is the average movement over the quarter of similar businesses. Mean imputation involves estimating a value for a unit by using the average value for a set of similar businesses.

Response rate

The response rate applies to the postal sample and gives the proportion of sales obtained from survey responses (compared with being imputed). The Economic Survey of Manufacturing has a target response rate of 85 percent. The response rate achieved for the December 2009 quarter was 91 percent.

For technical information contact:
John Gudgeon or Ken Smart
Christchurch 03 964 8700
Email: info@stats.govt.nz

Next release ...

Economic Survey of Manufacturing: March 2010 quarter will be released on 8 June 2010.