Manufacturing activity as measured by the Business New Zealand BNZ Performance of Manufacturing Index (PMI) remained virtually unchanged in October.The seasonally adjusted PMI was 49.7 in October, up 0.5 points from September. A number below 50 indicates
Manufacturing activity as measured by the Business New Zealand BNZ Performance of Manufacturing Index (PMI) remained virtually unchanged in October.
The seasonally adjusted PMI was 49.7 in October, up 0.5 points from September. A number below 50 indicates contraction. For the past four months, the PMI has averaged 49.6, indicating a stalling in the recovery.
"We believe the economic recovery has clearly run out of steam," BNZ economist Philip Borkin said.
"Somewhat worryingly, this contrasts with global trends which generally point to an ongoing pick up in manufacturing activity."
While a strong Australian economy and low NZ dollar against the Australian dollar were support factors during October, a weak domestic economy appeared to be the dominant factor.
The report's authors said it was unclear what impact the high NZ dollar against the US dollar was having.
BNZ also said that the disruption caused by the Canterbury earthquake was holding back activity in that region.
BusinessNZ's executive director for manufacturing, Catherine Beard, said that while the flat patch has gone on now for three months, having new orders and employment slightly on the expansion side of the ledger was a positive indicator that New Zealand manufacturing might be able to turn the corner soon.
New orders rose to an index reading of 51 in October from 50.3 in September. BNZ said that inventory levels also rose but the difference between new orders and inventory still suggested production would improve modestly in the near-term.
