The manufacturing sector remains on a steady but slower than expected path to recovery with sentiment from those in the industry best described as “cautious optimism”.

The month of June saw a pick-up in the level of expansion for the manufacturing sector, according to the BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

This represented the tenth consecutive month of expansion and the second highest June result since the survey began in 2002.

New Zealand’s zig-zag economic recovery continues.

Yesterday: bad news for the retail sector, with the sales graph for core retail sales trending down for the first time since 1995.

Today, the latest performance-manufacturing index, from Business New Zealand/BNZ, shows the highest output for 28 months.

“Production is cranking up,” BNZ economics Doug Steel says.

However, Business New Zealand ‘s executive director for manufacturing Catherine Beard says there is still a number of areas where the recovery has yet to be felt.

The so-called “50-tonne” rule proposed by Transport Minister Steven Joyce has provided welcome relief to desperate engineering firms throughout the country, which have faced a sustained period of little work during the economic downturn.

Some firms have been forced to close their doors and many others have shedd experienced staff to other industries and also overseas.

New Zealand’s manufacturing sector is in trouble, continuing 11-months of contraction that is seeing significant drops in capex and staffing across the sector.

The BNZ Capital Business NZ Performance of Manufacturing Index (PMI) registered a seasonally adjusted figure of 40.7, well below the baseline of 50.

Above 50 means that the manufacturing sector is expanding, below and it is contracting.

It hasn't shown a postive figure since April 2008.

To put the economic downturn in context, March last year produced an average result of 53.2.

Achieving a better economic future requires more than just “tax cuts and business as usual,” the New Zealand Manufacturers and Exporters Association says.

The association says that for the newly-elected National government to fulfil its promises of a stronger economy, it needs policy changes that focus on the supply side of the economy.

NZMEA chief executive John Walley says, “The National party has stated its goal to increase New Zealand’s exports to 40% of GDP by 2020; this cannot be achieved with our current policy settings.