Manufacturing activity slows from 15-month high

New Zealand manufacturing activity eased from a 15-month high in November, while remaining in expansion for the 26th consecutive month, as production and new orders declined in the month.

The BNZ-Business NZ performance of manufacturing index declined 3.7 points to a seasonally adjusted 55.2 in November, slipping from October's reading which was the highest level since July 2013. The index, where a reading above 50 indicates growing activity, has been in expansion for the past 26 months.

Manufacturing activity remained above the key 50 reading in all five sub-indices and across all four of the country's regions last month. Third quarter manufacturing sales and inventory data and an assumed rebound for agriculture processing implies a 2.5 percent increase in manufacturing output for the quarter, aligning with a mid-year pick-up the PMI has recorded, Bank of New Zealand senior economist Craig Ebert said in a note. The bank expects that to flow through to a 0.9 percent increase to third quarter gross domestic product, which is due to be reported next week.

The dip in expansion levels was led by a 5.3 point drop in production to an index reading of 56.6, while new orders declined from the last two months above 60 to 55.1 in November. Employment fell 2.6 points from a record to 54.9, deliveries was 56.6 and finished stocks was little changed at 51.4.

Across the regions, Canterbury/Westland posted the highest reading at 63.7, its highest level since May 2013. Otago/Southland eased to 62.7, and Central wound back to 52.8. Northern rose to 62.

Manufacturing by industry sub-groups were almost all positive, BNZ said. Petroleum, coal, chemical and associated product manufacturing increased to a reading of 68.4 in November, while food, beverage & tobacco manufacturing declined to 66.7. Machinery and equipment manufacturing slipped to 58.3, while metal product manufacturing fell 2.6 points to 55.7 from the previous month.

The proportion of positive comments in November slipped to 61.4 percent, from October's 68.7 percent, but remained higher than September's 56.8 percent.

(BusinessDesk)