8 Aug 2014

High dollar hits exporter confidence

1:54 pm on 8 August 2014

Exporters' nerves about the high kiwi dollar have led to a sharp drop in confidence in the latest survey of business conditions.

The Manufacturers and Exporters Association survey for June shows confidence fell from 20 points to just eight, despite strong growth in total sales.

Total sales are up 28 percent for the month and rose by 30 percent for the year ended June, compared to the twelve months ended June last year. Year-on-year domestic sales also leapt 26 percent.

All other surveyed indices were little changed, with the exception of staff numbers, which increased by almost 5 percent in the year ended June.

However, the association says the survey respondents expressed considerable concern about the high value of the New Zealand dollar in future.

Association chief executive John Walley said the fact the currency has remained above January levels, despite a sharp reduction in dairy prices, was of particular concern.

He said it brought into question the idea that the exchange rate will automatically stabilise after changes in commodity prices.

Mr Walley is urging the Reserve Bank to do more than just talk to bring down the currency to a more sustainable level.

He said recent job losses at the Auckland-based manufacturer Buckley Systems were a direct result of the overvalued currency.