Manufacturing activity and building work fell in the September quarter as the economy struggles to gain momentum.Data from Statistics New Zealand today showed manufacturing volumes fell a seasonally adjusted 1.4 percent, although values rose 1.3 percent d
Manufacturing activity and building work fell in the September quarter as the economy struggles to gain momentum.
Data from Statistics New Zealand today showed manufacturing volumes fell a seasonally adjusted 1.4 percent, although values rose 1.3 percent driven by a 3.2 percent rise in meat and dairy.
The volume of building work put in place fell a seasonally adjusted 3.2 percent after three consecutive quarterly rises, with residential building down 5.3 percent and non-residential building volume slipping 0.7 percent.
Goldman Sachs economist Philip Borkin said the fall in residential construction activity was entirely expected.
Excluding the impact of the Canterbury earthquake, residential construction activity looked set to languish in the coming quarters. Leading indicators, including house sales and consents, were weak and structural issues around affordability and credit availability were lingering, Mr Borkin said.
Non-residential activity had held up better than expected, but he continued to expect it to fall into a hole in the coming 12 to 18 months, moderated to a degree by Canterbury reconstruction work.
The fall in manufacturing production happened despite supportive levels of the New Zealand dollar against the Australian currency, Mr Borkin said.
"The weak domestic economy, and also the fact that the Australian economy is in the midst of a mid-cycle soft patch, appear to be the dominant forces at present."
ANZ economist Mark Smith said the low NZ dollar against the Australian dollar was clearly benefiting manufacturers selling to Australia, but the high NZ dollar against the greenback was bound to be making life difficult for firms exporting to US dollar markets.
Domestic manufacturing gauges showed signs of modest improvement in the fourth quarter, but nothing to suggest a sustained pick-up in activity was looming, Mr Smith said.
ASB economist Jane Turner said manufacturing confidence had eased steadily since June, as uncertainty over the global economic recovery emerged.
Despite that, the extent of the decline in non-food manufacturing had been a surprise
