Economic Survey of Manufacturing: March 2010 quarter

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

All manufacturing industries

The volume of manufacturing sales fell 2.7 percent in the March 2010 quarter. This reverses the rise of 2.7 percent in the December 2009 quarter and takes the series to its lowest point in almost 10 years.

Most of the fall in the latest quarter is attributable to the meat and dairy product manufacturing industry which accounts for over a quarter of manufacturing output. Excluding the meat and dairy industry, the other manufacturing industries rose 1.3 percent in volume in the March 2010 quarter.

Five industries showed falls while ten showed rises. The main contributors to the quarterly volume movement were:

• meat and dairy product manufacturing, down 10.1 percent
• other food manufacturing, down 9.0 percent
• basic metal manufacturing, up 14.3 percent
• petroleum and industrial chemical manufacturing, up 8.4 percent.

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

 

The value of sales rose 0.9 percent ($171 million) in the March 2010 quarter, following a rise of 1.3 percent in the previous quarter. The latest rise in value, despite a fall in volume, is the result of increased prices, particularly for dairy products (up 29.6 percent). Overall manufacturing output prices, as measured by the producers price index, rose 4.0 percent in the March 2010 quarter.

Thirteen industries show rises in value for the latest quarter, while two show falls. The main industry contributors were:

• other food manufacturing, down 8.4 percent ($194 million)
• petroleum and industrial chemical manufacturing, up 10.3 percent ($71 million)
• machinery and equipment manufacturing, up 3.2 percent ($52 million)
• meat and dairy product manufacturing, up 1.0 percent ($52 million).

 

The trend for the sales volume is flatter than indicated in the previous release and now shows little change for the latest four quarters. The trend for the sales value appears to have stopped falling. Trend movements are subject to revision when data becomes available for later time periods.

As can be seen from the 'Changes in manufacturing stocks' graph below, stocks of finished goods (which are not seasonally adjusted) are overwhelmingly down from a year earlier, with transport equipment manufacturing being the only industry to show a clear increase. Volumes are down 7.2 percent for the March 2010 quarter compared with the March 2009 quarter. Stock values, at $8.8 billion, are down 8.6 percent ($0.8 billion).

 

All manufacturing excluding meat and dairy product manufacturing

The volume of sales, excluding meat and dairy product manufacturing, rose 1.3 percent in the March 2010 quarter. As detailed in the 'All manufacturing industries' section, most industries show rises for the latest quarter. Basic metal manufacturing; petroleum and industrial chemical manufacturing; and rubber, plastic, and other chemical product manufacturing were the main contributors to the latest rise, while other food manufacturing showed the largest fall.

 

With comparatively small price changes in the March 2010 quarter, volume was the main driver of the 1.8 percent ($242 million) rise in sales value. This follows a rise of 3.1 percent in the previous quarter and five consecutive quarterly falls before that. As detailed in the 'All manufacturing industries' section, the largest rises in sales value for the latest quarter were for petroleum and industrial chemical manufacturing, and machinery and equipment manufacturing, while the largest fall was for other food manufacturing.

As can be seen from the graph above, the trend series for the sales volume and sales value are both rising.

The volume of finished goods stocks, which is not seasonally adjusted, is down 11.8 percent for the March 2010 quarter compared with the March 2009 quarter. The value, at $4.8 billion, is down 12.9 percent.  

Meat and dairy product manufacturing

Dairy industry values are mainly compiled on a non-standard quarter that is lagged by one month. This means, for example, that the March quarter includes values for the months of December, January, and February. Later this year there should be sufficient monthly data to enable removal of the lag.

The volume of sales for the meat and dairy product manufacturing industry fell 10.1 percent in the March 2010 quarter (following a rise of 2.8 percent in the previous quarter) and was the main driver of the overall fall. Milk powder, butter, and cheese export quantities fell 1.7 percent in the March 2010 quarter, while meat and edible offal export quantities rose 3.8 percent, as published in the Overseas Merchandise Trade: March 2010 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 10.1 percent fall in volume, the value of sales rose 1.0 percent in the March 2010 quarter because of overall price increases. Dairy product prices, as measured by the producers price index, rose 29.6 percent in the March 2010 quarter, while meat and meat product prices rose 4.9 percent. The latest rise in sales value follows three quarters of falls totalling 22.0 percent.

As can be seen from the graph above, the trend series for the sales volume and sales value are both declining.

The volume of finished goods stocks, which is not seasonally adjusted, is up just 0.1 percent for the March 2010 quarter compared with the March 2009 quarter. The value, at $4.0 billion, is down 2.8 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 fell 9.0 percent in the March 2010 quarter, following rises in the previous three quarters.

  

The value of sales fell 8.4 percent in the March 2010 quarter, following rises in the previous three quarters. The fall in the latest quarter was driven by the large drop in volume, with price movement, up 2.7 percent as measured by the producers price index, providing a small offset.

The trend series for both the sales volume and the sales value now show falls for the latest two quarters. However, trend estimates are subject to revision when data becomes available for later quarters.

The volume of finished goods stocks, which is not seasonally adjusted, is down 4.7 percent for the March 2010 quarter compared with the March 2009 quarter. The value, at $802 million, is down 5.8 percent.

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 rose 14.3 percent in the March 2010 quarter, following a historic low level in the December 2009 quarter. This industry provided the largest positive offset to the overall fall in total manufacturing volume.

 

The (unadjusted) value of sales rose 7.1 percent in the March 2010 quarter, following a fall of 19.1 percent in the previous quarter. Output prices for this industry, as measured by the producers price index, decreased 6.3 percent in the March 2010 quarter, confirming that the rise in sales value was volume-driven.

The trend series for the sales volume appears to have stopped falling, while the trend series for the sales value shows a decline for the latest three quarters. However, trend estimates are subject to revision when data becomes available for later quarters.

The volume of finished goods stocks, which is not seasonally adjusted, is up 4.4 percent for the March 2010 quarter compared with the March 2009 quarter. The value, at $174 million, is down 12.0 percent. 

Revisions

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

• other food manufacturing
• non-metallic mineral product manufacturing
• machinery and equipment manufacturing
• beverage, malt and tobacco manufacturing
• basic metal 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 Economic Survey of Manufacturing is primarily a postal survey and is 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 March 2010 quarter was 93 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: June 2010 quarter will be released on 8 September 2010.