Manufacturers hit a nine-year high in May
New Zealand manufacturing activity rose in May to the highest level since June 2004, led by new orders and production, stoking optimism the economy may be picking up pace.
The BNZ-BusinessNZ performance of manufacturing index rose 4 points to 59.2 in May, the highest level in nine years and the strongest reading for May since the survey began in 2002.
The monthly survey suggests manufacturing may not be as weak as suggested in government figure this week showing sales volumes fell 0.6 percent in the first quarter and indicates companies are confident enough to take on more workers.
Machinery and equipment manufacturing led gains in May, with a reading of 67.4.
"Today's PMI puts upside risk on our manufacturing and overall GDP forecasts over coming quarters," BNZ economist Doug Steel says. "The chances that New Zealand's economic growth this year is stronger than we forecast are increasing."
First-quarter gross domestic product figures are scheduled for release on June 20 and are expected to show the economy grew 0.6 percent in the first three months of the year, according to a Reuters survey, slowing from an unexpectedly fast 1.5 percent clip in the fourth quarter last year.
Today's PMI showed the diffusion index for new orders climbed to 63.1, the highest since June 2004. Production rose to 60.5, the highest since February, from 56 in April, while employment climbed 7.8 points to 55.3, the highest since November 2007.
Finished stocks climbed back into expansion at 51.8 from 47.6 and deliveries slipped to 54.6 from 55.8.
The expansion in New Zealand contrasts with a slide in Australia, with the two countries this year experiencing the two largest monthly differences in activity levels since the measure here began in 2002. In Australia, the April index was at 36.7, its lowest result since May 2009.
By region, Canterbury/Westland led at 67, followed by Otago/Southland on 60.7 and Northern at 60.5. The central region recorded a reading of 55.4.