Businesses have been faced with rising input costs and have not been able to pass those on because of weak domestic demand and stiff competition. The result has been lower margins. So businesses have been producing more but profits are down for many. There are notable exceptions. The primary sectors and other exporters are in a purple patch.
Farmers are in the midst of a 'one in twenty-five' year season.
Everything is in alignment. Excellent growing conditions, good animal health from the previous season, strong international demand and prices, and a record low exchange rate. The weak exchange rate is counter to historical experience when increased world commodity prices have normally resulted in an increase in the NZ Dollar. Surging exporter incomes will be a strong growth dynamic for the economy in 2001. Farmers were initially paying down debt, but are now becoming more liberal with their spending.