Manufacturing activity slows in July as winter weather weighs
New Zealand manufacturing activity continued to expand in July but dipped slightly compared with June after particularly dismal winter weather.
The BusinessNZ-Bank of New Zealand performance of manufacturing index fell 0.6 points to a seasonally adjusted 55.4 in July, extending its run of expansionary readings above 50 in every month since October 2012.
BNZ senior economist Doug Steel said that while the PMI bodes well for manufacturing gross domestic product to continue outperforming its long-term average "there is a slight whiff of a slowdown" as the July data was the lowest reading since January.
Steel said the "softer tinge may reflect some extreme weather during the month or perhaps it relates to a cooling housing market. Many respondents noted the weather as having a major negative influence on their business during the month."
Among the sub-indexes, employment jumped to 56.4 from 49.0 in the prior month. The increase "gives a sense that manufacturers see enough demand to lift staff levels," said Steel. He noted, however, the July increase likely overstates the trend pace given how soft June was. The three-month average of 53.6 is probably a better guide and indicates ongoing job gains, he said.
The production sub-index eased 1.8 points to 56.0 while new orders fell 2.6 points to 55.4. Finished stocks added 1.8 points to 56.4 while deliveries eased 0.4 points to 56.6.
In unadjusted terms, activity slowed in the Northern region, falling to 52.8 from 54.0, while the Central region fell to 52.6 from 58.9. Activity in Canterbury lifted to 55.2 from 50.9 while it rose to 59.2 from 54.8 in Otago.