Economic Survey of Manufacturing: March 2008 quarter

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

Total sales

Total manufacturing sales increased 3.7 percent ($743 million) during the March 2008 quarter, the third largest rise since the series began. This was just under half of the record December 2007 quarter increase of 8.3 percent ($1,547 million). The result was dominated by the meat and dairy product manufacturing industry, which rose 13.0 percent ($755 million) following the record 26.2 percent ($1,206 million) increase in the previous quarter.

Eight of the 15 published industries recorded increases in sales compared with the December 2007 quarter. Following meat and dairy product manufacturing was other food manufacturing up 3.5 percent ($75 million) and basic metal manufacturing, up 6.9 percent ($43 million) completing the trio of top movers.

Wood product manufacturing led the industries to fall during the quarter, down 4.7 percent ($56 million) just ahead of furniture and other manufacturing, which fell 10.5 percent ($55 million). Both of these industries were affected by falling volumes of sales of manufacturing during the March 2008 quarter.

The manufacturing sales trend has been stronger in the past year, up 12.8 percent since the March 2007 quarter, an average increase of 3.1 percent per quarter. This follows a small decrease of 1.1 percent between the September 2006 and March 2007 quarters.

 

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Manufacturing volumes, by comparison, increased 0.2 percent during the March 2008 quarter, following an increase of 3.4 percent in the previous quarter. Manufacturing volumes are derived by accounting for price changes. The price index used to deflate manufacturing sales is based on the December 1997 quarter prices.

Volume increases were recorded for seven manufacturing industries when compared with the December 2007 quarter, with meat and dairy product manufacturing producing the highest volume rise, up 5.0 percent. Basic metal manufacturing followed, up 6.1 percent, while the leading decreases were from wood product manufacturing and furniture and other manufacturing, down 4.7 percent and 11.0 percent, respectively.

However, if the meat and dairy product manufacturing industry were excluded, volumes decreased by 1.4 percent.

 

 

Total manufacturing (excluding meat and dairy product manufacturing)

During the March 2008 quarter total manufacturing sales excluding the meat and dairy product manufacturing industry, recorded a slight decrease of 0.1 percent ($12 million), following the 2.4 percent ($341 million) increase in the December 2007 quarter.

Wood product manufacturing led the seven industries which decreased during the quarter, down 4.7 percent ($56 million), followed by furniture and other manufacturing down 10.5 percent ($55 million). These two accounted for nearly half of the total decrease of the industries to fall, which totalled $233 million. Partially offsetting these decreases was an increase of 3.5 percent ($75 million) for other food manufacturing.

Ten industries recorded sales rises or falls of less than $40 million.

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The sales trend for this sub-group continues to generally increase, up 17.4 percent since the June 2003 quarter.

 

 Meat and dairy product manufacturing

A sales increase of 13.0 percent ($755 million) was recorded for the meat and dairy product manufacturing industry during the March 2008 quarter. The increase is the second largest since the series began, following the record December 2007 quarter rise of 26.2 percent ($1,206 million).

Meat and dairy product manufacturing volumes rose 5.0 percent, reflecting the combination of both volume and price rises contributing towards the sales increase. Prices received by meat and dairy producers, as recorded by the Producers Price Index: March 2008 quarter, show increases of 2.8 percent for meat products and 13.7 percent for dairy products compared with the previous quarter.

In the past year the sales trend for the meat and dairy product manufacturing industry has increased 35.9 percent, its largest annual increase for any year since the series began. Previously the highest annual trend increase was 27.6 percent recorded between the March 2000 and March 2001 quarters.

 

Other food manufacturing

The other food manufacturing industry includes the manufacture of oils and fats, flour mill products, cereal food and baking mix, bread, cake and pastry, biscuits, sugar, confectionery, seafood, and prepared animal bird feed.

During the March 2008 quarter sales for other food manufacturing increased 3.5 percent ($75 million) following the 7.8 percent ($154 million) increase in the December 2007 quarter.

By comparison, other food manufacturing volumes increased 0.4 percent from the previous quarter reflecting the higher contribution of increased prices contributing to the March 2008 quarter sales rise. Prices received by manufacturers in this industry, as reported in the Producers Price Index: March 2008 quarter increased 3.2 percent during the quarter, the largest rise since the December 2000 quarter.

The sales trend for other food manufacturing continues to rise, up 19.8 percent since the December 2006 quarter. This level of growth is the strongest since the 16.1 percent rise between the March 2005 and June 2006 quarters.

Wood product manufacturing

The wood product manufacturing industry consists of log sawmilling, wood chipping, timber resawing and dressing, and the manufacture of plywood and veneer, fabricated wood and wooden structural components. The industry comprises a mix of exported wood commodities combined with domestic wood manufacturing sales.

Sales for the wood product manufacturing industry decreased 4.7 percent ($56 million) during the March 2008 quarter, after a fall of 3.6 percent ($45 million) in the December 2007 quarter. Volumes decreases for both quarters largely dominate the results, down 4.7 percent and 4.1 percent for the March 2008 and December 2007 quarters, respectively.

Since the September 2007 quarter peak, the sales trend for wood product manufacturing has decreased 7.7 percent. This followed a two-year period of trend increase of 17.1 percent between the September 2005 and September 2007 quarters.

Furniture and other manufacturing

The furniture and other manufacturing industry includes the manufacture of prefabricated buildings, wooden and sheet metal furniture, mattresses, jewellery and silverware, and toy and sporting goods.

Sales for the furniture and other manufacturing industry fell 10.5 percent ($55 million) during the March 2008 quarter. This is the first time since the series began that it has fallen by more than 10.0 percent, with the next largest decrease of 9.3 percent ($39 million) being recorded in the September 2000 quarter.

The sales decrease was dominated by the fall in volumes of 11.0 percent from the December 2007 quarter, again eclipsing the previous largest fall of 10.2 percent in the September 2000 quarter.

Since the December 2006 quarter the sales trend for furniture and other manufacturing has decreased 10.4 percent, averaging a fall of 2.1 percent per quarter.

Stocks

During the March 2008 quarter, actual finished goods manufacturing stocks increased 13.5 percent ($1,048 million) compared with the March 2007 quarter, while stocks for the December 2007 quarter increased by a similar amount, up 13.0 percent ($936 million) from the December 2006 quarter.

With the effects of price changes removed, the value of finished goods stocks as at 31 March 2008 was $6,038 million, a decrease of 2.0 percent compared with 31 March 2007.

Meat and dairy product manufacturing provided the largest contribution to the stock volumes decrease, down 8.9 percent.

Revisions

Amended data received from respondents has resulted in revisions for the following industry for the March 2007 quarter:

• machinery and equipment manufacturing operating income and operating expenditure, and salaries and wages.

There have also been corresponding revisions to the seasonally adjusted trend and total series.

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Measurement errors

All statistical estimates are subject to measurement errors. These include both sample errors and non-sample errors. In addition, the survey applies imputation methodologies to cope with small firms and non-response. These measurement errors should be considered when analysing the results from the survey. 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):

• five percent for value added, sales and salaries and wages at the total manufacturing level
• ten percent for value added, sales and salaries and wages at the published industry level, where the value-added design variable 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.

At the industry level, the following sample errors were achieved in the March 2008 quarter at the 95

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 sourced from Inland Revenue.

Imputation

Small firms

Small- to medium-sized firms are generally not surveyed. Their variables are instead modelled from administrative data sourced from Inland Revenue. Ratios calculated from the postal sample units are applied to the administrative data to provide an estimate of their variables.

Non-response imputation

Although every attempt is 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.

The table below indicates the percentage of sales that was imputed in the March 2008 quarter:

Response rate

The response rate describes the proportion of sales, which was provided by actual survey responses. Note that the calculation of this response rate relates only to data for the postal sample. The Economic Survey of Manufacturing has a target response rate of 85 percent. The response rate achieved for the March 2008 quarter was 91 percent.


For technical information contact:
Jason Fullen or Blair Cardno
Christchurch 03 964 8700
Email: subannuals@stat.govt.nz.

Next release ... 

Economic Survey of Manufacturing: June 2008 will be released on 15 September 2008