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Economic Survey of Manufacturing: December 2008 quarter
Embargoed until 10:45am  –  16 March 2009
Commentary

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

All manufacturing industries

The volume of manufacturing sales fell 5.4 percent in the December 2008 quarter. This is the fourth consecutive quarterly fall and is the largest fall since the series began in 1994. However, increased volatility in this series in recent quarters should be taken into consideration with regard to the magnitude of this latest fall. The series is now at its lowest level since the March 2002 quarter.

Volumes are calculated by removing the effect of price changes from values.

Graph, Total Manufacturing Sales.

 

Decreases in sales volumes occurred in 12 of the 15 published industries in the December 2008 quarter. The largest decrease was in the meat and dairy product manufacturing industry (down 6.0 percent), followed by the petroleum and industrial chemical manufacturing industry (down 30 percent), the basic metal manufacturing industry (down 28 percent), and the transport equipment manufacturing industry (down 18 percent).

Minor increases in sales volumes occurred in three published industries in the December 2008 quarter. The largest increase was in the machinery and equipment manufacturing industry (up 0.9 percent).

Although the volume of sales was down, increased prices for dairy products, fertilisers and chemicals, and transport equipment helped keep the overall sales value flat in the December 2008 quarter. The meat and dairy product manufacturing industry had the largest increase (up $326 million) but this was offset by decreases in other industries, particularly the basic metal manufacturing industry, which fell by $203 million.

Graph, Changes in Seasonally Adjusted Manufacturing Sales.  

 

The trend for the sales volume shows a decline of 8.0 percent over the latest three quarters, while the trend for the sales value continues to rise.

Stocks of finished goods, which are not seasonally adjusted, were down 1.3 percent in volume for the December 2008 quarter compared with the December 2007 quarter. With price changes included, the value was up 14 percent ($1,148 million) from the December 2007 quarter. The meat and dairy product manufacturing industry was the main contributor to these movements.

 Graph, Total Manufacturing Stocks.

All manufacturing excluding meat and dairy product manufacturing

The volume of sales, excluding meat and dairy product manufacturing, fell 5.1 percent in the December 2008 quarter, following a fall of 3.5 percent in the September 2008 quarter. Three industries contributed the bulk of the latest fall: petroleum and industrial chemicals, basic metals, and transport equipment.The main rise, which was minor compared with the falls, was for the machinery and equipment manufacturing industry.

 Graph, Manufacturing Sales Excluding Meat and Dairy Product Manufacturing.

The value of sales fell 1.2 percent ($178 million) in the December 2008 quarter, having been flat in the September 2008 quarter. Basic metal manufacturing (down $203 million), and transport equipment manufacturing (down $93 million) had the largest falls in sales value in the December 2008 quarter, while machinery and equipment manufacturing (up $50 million) showed the largest rise. 

The trend for the sales volume shows a decline of 8.3 percent for the latest three quarters, while the trend for the sales value shows a fall for the latest quarter.

Stocks of finished goods, which are not seasonally adjusted, were up 2.4 percent in volume for the December 2008 quarter compared with the December 2007 quarter. With price changes included, the value was up 14 percent ($672 million) from the December 2007 quarter.

Graph, Manufacturing Stocks Excluding Meat and Dairy.

Meat and dairy product manufacturing

The volume of sales for the meat and dairy product manufacturing industry fell 6.0 percent in the December 2008 quarter, after falling 0.3 percent in the previous quarter. 

Graph, Meat Dairy Product Manufacturing Sales.

A sales value increase of 5.3 percent ($326 million) was recorded in the December 2008 quarter, following a 3.2 percent increase in the previous quarter. Part of the latest sales increase was due to a reclassification of some activity from primary product food wholesaling to manufacturing.

Meat prices, as measured by the Producers Price Index, dipped 1.1 percent in the December 2008 quarter, while dairy prices, largely due to lower currency exchange rates, surged 19 percent.

The trend for the sales volume shows a decline of 12 percent for the latest five quarters, while the trend for the sales value shows rises for the latest two quarters.

Stocks of finished goods, which are not seasonally adjusted, were down 8.7 percent in volume for the December 2008 quarter compared with the December 2007 quarter. With price changes included, the value was up 15 percent ($475 million) from the December 2007 quarter, reflecting the impact of prices rises when expressed in New Zealand currency.

Stocks in this industry typically rise in the December and March quarters then fall in the following two quarters.

Graph, Meat and Dairy Product Manufacturing Stocks.

Petroleum and industrial chemical manufacturing

The petroleum and industrial chemical manufacturing industry includes petroleum refining, petroleum and coal product manufacturing, and fertiliser and other industrial chemical manufacturing.

The volume of sales for this industry fell 30 percent in the December 2008 quarter, following rises totalling 18 percent in the previous four quarters. The series, which began in 1994, is now at its lowest level.

Graph, Petroleum and Industrial Chemical Manufacturing Sales.

The value of sales fell 6.1 percent ($58 million) in the December 2008 quarter, following a rise of 43 percent during the previous four quarters. Price movements have had a big impact on the latest two quarters. Output prices, as measured by the Producers Price Index, jumped 27 percent in the December 2008 quarter, following a rise of 15 percent in the previous quarter.

The trend for the sales volume shows a decline for the latest two quarters, while the trend for the sales value shows a rise for the latest eight quarters. 

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 by this industry do not have a stable seasonal pattern, so are not seasonally adjusted.

The volume of sales for this industry fell 28 percent in the December 2008 quarter, following a fall of 1.8 percent in the September 2008 quarter.

Graph, Basic Metal Manufacturing Sales.

The value of sales fell 23 percent ($203 million) in the December 2008 quarter, following a rise of 6.2 percent in the September 2008 quarter. Output prices, as measured by the Producers Price Index, rose 7.6 percent in the December 2008 quarter and 8.1 percent in the September 2008 quarter.

The trend for the sales volume shows a decline for the latest two quarters, while the trend for the sales value shows a fall for the latest quarter.

Stocks of finished goods, which are not seasonally adjusted, were down 26 percent in volume for the December 2008 quarter compared with the December 2007 quarter. With price changes included, the value was down 10 percent ($25 million) from the December 2007 quarter. 

Graph, Basic Metal Manufacturing Stocks.

Transport equipment manufacturing

The transport equipment manufacturing industry includes the manufacture and repair of a variety of transport equipment including ships, locomotives and aircraft. Sales by this industry do not have a stable seasonal pattern, so are not seasonally adjusted.

The volume of sales for this industry fell 18 percent in the December 2008 quarter, following rises of 11 percent in each of the previous two quarters.

Graph, Transport Equipment Manufacturing Sales.

The value of sales fell 10 percent ($93 million) in the December 2008 quarter, following rises of 18 percent and 14 percent in the September and June 2008 quarters, respectively. Output prices, as measured by the Producers Price Index, rose 11 percent in the December 2008 quarter and 6.5 percent in the September 2008 quarter. 

The trend for the sales volume shows a decline for the latest quarter after rising for two quarters.
The trend for the sales value shows a rise for the latest seven quarters.

Stocks of finished goods, which are not seasonally adjusted, were down 9.4 percent in volume for the December 2008 quarter compared with the December 2007 quarter. With price changes included, the value was up 9.7 percent ($19 million) from the December 2007 quarter.

Graph, Transport Equipment Manufacturing Stocks.

Revisions

Some imputed data in the September 2008 quarter has been replaced by recently received data. This has resulted in revisions to three industries, particularly the meat and dairy product manufacturing industry. These revisions have had a flow-on effect on higher-level series and on seasonally adjusted and trend series. The main changes are to purchases and closing stocks of finished goods, as shown below. 

 Industry Variable  Series MANQ.  Period (quarter)  Published 15 Dec 2008   Published 16 Mar 2009
   $(million)
 Meat and dairy  Purchases  SNMCZ1B  Sep 2008 4,396  4,170 
 Meat and dairy  Stocks  SNMCZ1E  Sep 2008 2,109  2,294
 All manufacturing  Purchases  SNMCZZB  Sep 2008 15,025   14,802
 All manufacturing  Stocks  SNMCZZE  Sep 2008 7,779  7,969

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 are calculated each quarter for absolute values and for changes in value from the previous quarter.

The sample errors for the December 2008 quarter, at the 95 percent confidence interval limit, are:  

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 Industry Sample error for sales    Sample error for change in sales
  Percent
 Meat and dairy product manufacturing  0.0 0.0
 Other food manufacturing  9.2 9.3
 Beverage, malt and tobacco manufacturing   0.0 0.0
 Textile and apparel manufacturing  5.7 2.3
 Wood product manufacturing  4.4 5.1
 Paper and paper product manufacturing  0.0  0.0
 Printing, publishing and recorded media  5.6  5.4
 Petroleum and industrial chemical manufacturing  0.0  0.0
 Rubber, plastic and other chemical product manufacturing  14.5  10.2
 Non-metallic mineral product manufacturing  4.2  2.3
 Basic metal manufacturing  0.0  0.0
 Structural, sheet and fabricated metal product manufacturing  3.8  3.3
 Transport equipment manufacturing  12.4  14.8
 Machinery and equipment manufacturing  3.2  3.4
 Furniture and other manufacturing  5.2  2.9
 Total manufacturing  1.5  1.6

 

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.

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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.

The table below shows percentages of sales imputed in the December 2008 quarter:

 Industry Non-response Tax modelled
  Percentage of sales
 Meat and dairy product manufacturing  0.8 2.8 
 Other food manufacturing  11.4  5.4
 Beverage, malt and tobacco manufacturing   2.9  4.2
 Textile and apparel manufacturing  18.5  16.2
 Wood product manufacturing  8.9  8.1
 Paper and paper product manufacturing  4.5  0.7
 Printing, publishing and recorded media  12.2  10.7
 Petroleum and industrial chemical manufacturing  3.1  4.4
 Rubber, plastic and other chemical product manufacturing  10.1  6.8
 Non-metallic mineral product manufacturing  8.2  6.9
 Basic metal manufacturing  4.1  4.5
 Structural, sheet and fabricated metal product manufacturing  21.1  10.9
 Transport equipment manufacturing  14.0  9.0
 Machinery and equipment manufacturing  16.3  11.5
 Furniture and other manufacturing  15.2  22.9
 Total manufacturing  8.1  6.6

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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 2008 quarter was 91 percent.

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

Next release ...

Economic Survey of Manufacturing: March 2009 will be released on 15 June 2009

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