Manufacturing growth still positive but momentum slowing
The key issue from here is whether there will be a pick up in the pre-Christmas period.
Growth in the country’s manufacturing sector continues to slow.
Although remaining positive, the latest Business New Zealand/Bank of New Zealand performance of manufacturing index (PMI) shows the fourth consecutive monthly drop in expansion.
The key issue from here is whether there will be a pick up in the pre-Christmas period, Business New Zealand’s executive director of manufacturing Catherine Beard said.
The PMI was at 50.8 for September - any reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining.
This is down from 52.7 in August – and the average for the year so far has also been of 52.7.
Bank of New Zealand economist Doug Steel pointed to several major “headwinds” facing the manufacturing sector, including low domestic construction activity, a high New Zealand dollar against the US currency - which has been "a pest" for manufacturers - and ongoing concern about global economic conditions.
Under those circumstances, the sector was doing well to continue expanding, even if the rate of that expansion has been slowing.
“We take some solace from the fact that the PMI remains above the 50 mark, even with the headwinds outlined. And we remain optimistic for manufacturing as some of these headwinds are expected to at least abate or even become tailwinds next year.”
Some of the forward-looking indicators in the PMI are more positive than the overall index figure, he said.
New orders were at 51.5, and employment is at 51.2 - both pointing to a probable pick up in activity over the next few months, he said. Pulling the headline figure down were production, at 50.8 – the lowest it has been for six months – and deliveries contracted, to 49.7.
Rob Hosking
Thu, 13 Oct 2011
Thu, 13 Oct 2011
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Manufacturing growth still positive but momentum slowing
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