Economic Survey of Manufacturing: March 2009 quarter

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

All manufacturing industries

Total manufacturing sales volumes were flat in the March 2009 quarter, up only 0.2 percent, but reached positive territory for the first time since December 2007. The increase was due to the 23.1 percent rise in sales volumes for the meat and dairy product manufacturing industry, highlighting the impact this sector has on the total manufacturing results.

Only two other industries recorded increases in sales volumes: petroleum and industrial chemical manufacturing (up 6.5 percent), and beverages, malt and tobacco manufacturing (up 1.6 percent).

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

 

Of the 12 industries to record sales volume falls in the March 2009 quarter, nine recorded their second (or more) consecutive quarterly decrease. In the March 2009 quarter, the largest decrease was in the transport equipment manufacturing industry (down 32.7 percent), followed by the other food manufacturing industry (down 9.1 percent). Completing the top volume movers was the structural, sheet and fabricated metal product manufacturing industry (down 12.7 percent).

Although volumes were slightly up, the value of manufacturing sales fell 0.9 percent ($179 million), the third quarterly decline since March 2008. Decreases in sales occurred in all but two of the 15 published industries, with five recording sales decreases of more than $100 million, led by transport equipment manufacturing (down 23.6 percent or $175 million). Structural, sheet and fabricated metal product manufacturing was next (down 9.7 percent or $129 million) followed by wood product manufacturing (down 11.3 percent or $125 million).

Offsetting the decreases was the meat and dairy product manufacturing industry with a rise of 10.9 percent ($709 million) in the March 2009 quarter.

 

The trend for manufacturing volumes showed a decline of 9.2 percent since the September 2007 quarter, an average quarterly fall of 1.6 percent. However, the rate of decrease has strengthened since March 2008 to 2.4 percent. The sales value trend has eased in the past year after a period of high growth in the preceding year.

Stocks of finished goods, which are not seasonally adjusted, were up 2.8 percent in volume for the March 2009 quarter compared with the March 2008 quarter. Stock values were up 9.3 percent ($822 million) from the March 2008 quarter.

All manufacturing excluding meat and dairy product manufacturing

Sales volumes (excluding those for meat and dairy product manufacturing) fell by 6.5 percent in the March 2009 quarter, exceeding the previous record fall of 5.4 percent in the December 2008 quarter. In the past three quarters, volumes have fallen by 14.7 percent. The decrease in the March 2009 quarter was led primarily by the transport equipment manufacturing industry (down 32.7 percent) and the other food manufacturing industry (down 9.1 percent).

The value of sales also fell by 5.5 percent ($798 million), the largest recorded fall since the current series began in December 1992. This fall follows decreases of 0.2 percent ($25 million) in the September 2008 quarter and 1.7 percent ($245 million) in the December 2008 quarter. The latest quarter's fall is the first time since June 1998 that sales values have fallen for three consecutive quarters.

Five industries recorded sales value falls of over $100 million, led by transport equipment manufacturing (down 23.6 percent or $175 million), structural, sheet and fabricated metal product manufacturing (down 9.7 percent or $129 million), and wood product manufacturing (down 11.3 percent or $125 million).

 

The trend for sales volumes showed a decline of 14.8 percent in the past year, following a period of increase of 2.4 percent between the December 2006 and March 2008 quarters.

Stock volumes of finished goods, which are not seasonally adjusted, fell 0.3 percent for the March 2009 quarter compared with the March 2008 quarter. Stock values were up 10.1 percent to reach $5.6 billion for the March 2009 quarter.

Meat and dairy product manufacturing

Sales volumes for the meat and dairy product manufacturing industry increased 23.1 percent in the March 2009 quarter. This rise follows four quarters of volume decreases during 2008, which was the only time that this has occurred since the current series began. The increase in volumes was primarily due to increased dairy product export volumes which rose 14.0 percent, while meat exports fell 0.9 percent as measured in the Overseas Trade Indexes.

Although prices for dairy product manufacturing fell sharply in the March 2009 quarter, the large volumes increase resulted in sales values increasing 10.9 percent ($709 million). This followed an increase of 5.9 percent ($365 million) for the December 2008 quarter. Prices for dairy products as measured by the Producers Price Index fell 24.3 percent in the March 2009 quarter, while prices for meat and meat products were reasonably stable, down 0.5 percent.

 

Both the sales volumes and value trends for the meat and dairy manufacturing industry have increased substantially since the September 2008 quarter (up 16.5 percent and 17.4 percent, respectively).

Stocks of finished goods, which are not seasonally adjusted, were up 8.4 percent in volume for the March 2009 quarter compared with the March 2008 quarter. In the March 2009 quarter, stock values were also up, by 8.1 percent or $311 million.

 

Note: The Economic Survey of Manufacturing (QMS) dairy industry statistics are compiled on a non-standard quarter, meaning that there is a one-month lag in the data. For example, the March quarter includes the December, January and February months. Traditionally, the dairy industry peaks in the months of November and December. Monthly data is now being supplied and once there is a substantial time series and a new seasonal pattern can be established, the dairy industry (combined with the meat industry) will be published on a standard quarter.

Timing is one difference between the volume data published in the QMS release, and the value-added estimate for dairy manufacturing in the quarterly gross domestic product (QGDP) release. In addition, the QGDP estimate uses production volumes of dairy products sourced elsewhere to derive value-added, rather than volumes sourced from QMS. These differences in methods can result in significantly different movements when comparing output volumes from the QMS with value-added from QGDP as occurred in the December 2008 quarter.

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.

Sales volumes for this industry have fallen by a record of 32.7 percent for the March 2009 quarter, exceeding the previous record fall of 24.5 percent in the December 1998 quarter. Coupled with the decrease of 18.0 percent in the December 2008 quarter, the transport equipment industry manufacturing volumes have fallen 44.8 percent since the September 2008 quarter.

Price increases over the last two quarters have done little to offset the fall in volumes, with sales values down by a record of 23.6 percent ($175 million) for the March 2009 quarter. Combined with the previous quarter's decrease of 10.5 percent ($87 million), the latest quarter's fall is the first time that a sales value decrease has exceeded more than $250 million, (31.6 percent) for any two-quarter period.

As measured by the Producers Price Index, transport equipment manufacturing prices rose 10.7 percent and 15.0 percent for the December 2008 and March 2009 quarters, respectively.

Both the sales volumes and value trends showed a decline since the September 2008 quarter.

Stocks of finished goods, which are not seasonally adjusted, have fallen both in terms of volume and value from the March 2008 quarter, down 31.5 percent and 9.0 percent, respectively.

Structural, sheet and fabricated metal product manufacturing

The structural, sheet and fabricated metal product manufacturing industry primarily involves the manufacture of structural steel, architectural aluminium, sheet metal, and fabricated metal products.

Sales volumes for the structural, sheet and fabricated metal product manufacturing industry fell 12.7 percent in the March 2009 quarter, following consecutive falls of 7.4 percent and 5.4 percent for the September and December 2008 quarters, respectively. The volumes trend for this industry has been in general decline since March 2004, with an average quarterly fall of 1.9 percent. However, the pace of this decline has strengthened since the March 2008 quarter, falling at an average of 6.0 percent per quarter.

Sales values decreased 9.7 percent ($129 million) in the March 2009 quarter, showing continuing decline from the June 2008 quarter (down 2.5 percent or $34 million in the September 2008 quarter, and down 1.2 percent or $16 million in the December 2008 quarter). The latest quarterly decrease is the first time that decreases in sales values have stretched to three quarters.

Prices for this industry as measured by the Producers Price Index have risen by 2.3 percent.

Stocks of finished goods, which are not seasonally adjusted, fell 12.4 percent in volume terms compared with the same quarter of the previous year. This latest quarter's fall is the fifth consecutive fall since the December 2007 quarter. However, with price changes included, the value of stocks of finished goods was up 2.3 percent in the March 2009 quarter.

Wood product manufacturing

During the March 2009 quarter, sales volumes for the wood product manufacturing industry decreased 10.9 percent, the first time volumes have fallen by more than 10.0 percent. The industry involves all facets of wood manufacturing, from log sawmilling and timber resawing to wooden structural component manufacturing, with exports accounting for over half of the industry's sales value. Export volumes of forestry products as measured in the Overseas Trade Indexes fell 5.1 percent this quarter. 

In the March 2009 quarter, sales values for this industry decreased 11.3 percent ($125 million), following an increase of 3.1 percent ($33 million) in the previous quarter. The latest quarter's fall in value is the highest on record.

Prices for the wood industry have dipped 0.7 percent this quarter following two quarters of increase as measured in the Producers Price Index.

The trend for sales volume for wood product manufacturing has been declining since June 2007 at a rate of 3.8 percent per quarter, its longest and steepest decline since the current series began. The trend for the sales value has also been in decline, falling at an average of 3.4 percent per quarter since the September 2007 quarter.

Revisions

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

• Paper and paper product manufacturing, raw materials and finished goods (December 2007)
• Transport equipment manufacturing sales, purchases, raw materials and finished goods for all quarters of 2008. Salaries and wages, additions and disposals of fixed assets for March, June and September 2008 quarters. 

The main changes are in the following table.

Measurement errors

Sample errors

• 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

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.

The table below shows percentages of sales imputed in the March 2009 quarter:

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 March 2009 quarter was 88 percent.

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