Manufacturing surge 'one out of the box'
The country's manufacturing sector has shown is largest improvement in nearly two years.
The country's manufacturing sector has shown is largest improvement in nearly two years.
The main measurement of performance, the Bank of New Zealand/Business New Zealand performance-manufacturing index (PMI) shows a 6.9% rise in February, the highest level since April 2010.
New orders and production are both recording their highest levels since 2004, according to the index released this morning.
Employment remains largely unchanged, as are finished stocks, but deliveries are also up.
The main sectors of increase are metal product manufacturing and machinery & equipment manufacturing, while petroleum, coal, chemical & associated products area reversed last month's decline.
Bank of New Zealand senior economist Doug Steel says some sort of improvement was anticipated soon but the result was better than anticipated.
"Really, we would have taken any tick up in just new orders to keep our positive underlying growth outlook on track," he says.
However, the overall index leaped from 50.8 (anything above 50 on the index is an improvement; anything under is a deterioration in output) to 57.7.
"Our cautious optimism was well and truly exceeded …In fact, the PMI has only printed better than today on two occasions in the past seven years.
"It is one out of the box."
Mr Steel says the overall data needs to be interpreted carefully: the index measurs changes in output and is not about the outright level of activity.
"The manufacturing sector was hit harder than most during the 2008/09 recession. In fact, manufacturing real GDP fell 20% from a peak in mid 2005 to a trough in mid-2009.
"It is from this low base that the developing positive growth signals are coming off."
The important message however is that the trend is now positive, he says.
Rob Hosking
Thu, 15 Mar 2012
Thu, 15 Mar 2012
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Manufacturing surge 'one out of the box'
19433