Talk Money with Tony Field – September 29, 2015


Many New Zealanders are worried about their job prospects. But exporters are feeling confident and many are hoping to hire more staff over the next 12 months.

Export New Zealand has released its annual survey of its members. A majority of the people surveyed are expecting increasing profitability and rising orders in the next year. But nearly half say red tape and tariffs are adding to their costs.

Seventy percent of respondents said they expected business profitability to improve, 22 percent expect it to stay the same and 6.8 percent believe it will deteriorate.

Around 54 percent said they expect their business to hire more people, 38.5 percent believe their staffing levels will stay the same and 6.8 percent expect to reduce staff numbers.

Sixty-eight percent said they are able to access skilled staff, but 31 percent said it is a constraint to their business.

Export NZ says the majority expect their orders across all markets to increase; either slowly (48.5 percent) or substantially (31.6 percent). The strongest average sales growth was expected in North America (20 percent).

The New Zealand dollar has fallen around 30 percent in value in the past year, making our exporters more competitive.

But there are other challenges.

One is price competitiveness. Another issue is securing adequate funding to develop new markets.

Almost 42 percent said regulatory and non-tariff barriers are a problem.

Export NZ says China continues to be a challenging market to do business in. The organisation says exporters in the food and beverage category need more help from Ministry of Primary Industries to navigate market access issues as this is holding back trade, particularly in the processed food category.

The survey was released a day after a Westpac McDermott Miller survey found employment confidence has fallen to a three year low.

There is particular concern about the prospect for wage increases. The number of people who expect a pay increase over the coming year has fallen to its lowest level since the survey began in 2004.

"This is a particular concern as the recent fall in the New Zealand dollar will result in the prices for many goods pushing higher over the coming months. As a result, many households may find their budgets becoming increasingly stretched over the coming year," says Westpac economist Satish Ranchhod.

There are growing signs the domestic economy has slowed and this has left many people nervous about job security.

The falling dollar is good for exporters, but not good for importers. Many importers are reluctant to raise prices too much. So paying only modest wage increases is a way of saving costs.

It has been a bad start to the week for Wall Street and European markets.

The European markets were down by more than 2 percent as investors fretted about China and the global economy.

Mining company Glencore fell 29 percent, after an analyst's report raised fresh concerns about the company's prospects if commodity prices do not improve.

The fall in Glencore's share price saw BHP lose ground as well. It was down 6 percent.

The Dow Jones industrial average lost 312 points, or 1.9 percent. It closed at 16001.

The S&P 500 slumped 2.6 percent and the Nasdaq lost 3 percent.

The NASDAQ was dragged lower by another dismal performance by biotech stocks. The iShares Nasdaq biotechnology ETF lost 7 percent.

Both West Texas crude and European Brent oil fell 2 percent in price due to concerns about a lack of demand.

Shares in Shell fell 2.6 after the oil giant announced it will stop exploring in Alaska, for the "forseeable future". Its initial drilling found little oil or gas.

The New Zealand dollar has weakened.

It is trading for 63.33 US cents, down half a percent.

The Kiwi is 90.55 Australian cents and 41.74 pence.

It is down 1 percent against the Yen, at 75.88.

The Kiwi is trading at 56.38 Yen.

Volkswagen shares fall again

Volkswagen's share price fell 7.5 percent after its subsidiary Audi said 2.1 million of its cars were affected in the emissions scandal.

VW-owned Porsche fell 6.9 percent.

Apple has announced it sold more than 13 million new iPhone 6s and iPhone 6s Plus models, during their first weekend.

Analysts had been expecting sales of 12 million.

Two million of the phones were sold in China.

Chief executive Tim Cook says the sales were "phenomenal".

But the share price closed down 1.5 percent.

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