Manufacturing dips in April on holiday pause but remains firmly in expansion
The pace of expansion in New Zealand's manufacturing sector eased in April, to dip below the 4-month average, as two consecutive long weekends weighed on production.
The BNZ-Business NZ seasonally adjusted performance of manufacturing index fell to 55.2 in April, from a downwardly revised 58 in March, and 55.9 in April last year. A reading above 50 indicates expansion in the sector.
The PMI in the first third of the year averaged 56.4 and the sector has been in expansion for 19 consecutive months. April's holiday-induced dip was recorded across most economic indicators, as the Easter and Anzac breaks gobbled up working hours, but the underlying trend of an economic upswing remains, said BNZ.
"A holiday effect fits with slower production growth in April," BNZ said in a note. "For the broader economy watchers, the holiday effect is important to note. We think it has had a decent negative influence on other April indicators like house sales and electronic card transactions in the month."
Four out of the five seasonally adjusted main diffusion indices were in expansion, although all recorded a drop from March levels, with new orders retreating the most to 55.2 in April, from a 60.2 reading in March. Production and deliveries were the strongest at 55.3, outperforming April's PMI. Finished stock contracted to 49.3, but remained above 47.6 recorded a year earlier.
Employment slipped from a seven-year high to 54.5 but was well above the contracted 48.4 level recorded in April last year. Its three month average of 55 is the highest level since the data series began in 2002, buoyed by strong demand for labour in agriculture and building, BNZ said.
All regions across New Zealand were in expansion, with Canterbury/Westland scraping in at 50.1. Otago/Southland was the strongest at 57.7, followed by Northern at 53 and Central at 51.3.