A survey of business conditions by the New Zealand Manufacturers and Exporters Association has reported confidence in the sector falling to its lowest level in more than 2 1/2 years years.

The survey by the Christchurch-based body was carried out in October and was of businesses who turned over a total of $276 million in annualised sales, 78 per cent of which were exports.

Net confidence fell to -23 from 22 in August. It's the lowest reading since March 2014, when the kiwi dollar was trading near 85 US cents, and the first time the figure has turned negative since May 2015, when the kiwi was about 75 US cents. The currency recently traded at 73.17 US cents.

The survey shows year on year export sales fell 12 per cent, while domestic sales rose 17 per cent compared to September 2015. The number of staff employed slipped 2.8 per cent on a year ago.


The current performance index, which is a combination of profitability and cash flow, was 94.3, down from 100.7. Anything below 100 indicates contraction.

NZMEA chief executive Dieter Adam said "some of the decline in exports we observed may be explained by lumpy sales month by month, but when paired with the lower confidence and index measures, it does suggest some challenges hitting export sales in September."

When asked about issues constraining their businesses, manufacturers said that these were 77 per cent markets, 15 per cent skilled staff, and 8 per cent capital. There were moderate shortages of supervisors, trade persons, managers, professional/scientists and operators/labourers.