Manufacturers are cautiously optimistic: survey
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.
The seasonally adjusted PMI for June at 56.2 was up 2.2 points from May. A PMI reading above 50.0 indicates manufacturing is generally expanding and below 50.0 shows it is declining.
BusinessNZ’s executive director for manufacturing Catherine Beard said although the results show a continuing solid performance from the manufacturing sector, the recovery has been slower expected coming out of a recession.
“The continued expansion in the manufacturing sector for the tenth consecutive month shows a slow and steady path to recovery, and the sentiment from manufacturers could best be described as cautious optimism.
“While all the indices are continuing to head in the right direction it has been a slow and steady climb back from the depths of the recession and for many the improvement has been a bit up and down.”
Bank of New Zealand economist Doug Steel said the solid pace of the manufacturing sector pushing forward is important as the rebound in manufacturing production has been a major thrust behind the economic recovery to date.
“Manufacturing GDP is up 4.3% on year ago levels, displaying more than twice the pace of growth in the economy overall. While we need to remember that this growth has been off a very depressed base due to the recession, there is a sense of growth reorientation going on in the economy, with manufacturing, mining and forestry standing out.
“This reorientation of growth is closely associated with the economic rebalancing towards production and saving, and manufacturers’ growing confidence suggests the sector has become a relative sweet spot, with more growth around the corner.”