More growth for manufacturing sector

The manufacturing industry continues to thrive, according to a new report that shows sector growth for the fifth consecutive month.

The BNZ and BusinessNZ’s performance of manufacturing index (PMI) report, a monthly survey of the manufacturing sector, has revealed the highest levels of growth since the survey’s inception in 2002.

A PMI score of above 50 indicates activity is expanding and in October New Zealand’s manufacturing sector achieved 59.35, three points higher than the same time last year.

Food, beverage and tobacco manufacturing preformed particularly well with a score of 74.0.

Business NZ’s executive director for manufacturing Catherine Beard says the PMI has continued to build momentum over the past five months, with a run of steady and ongoing increases in activity since May.

“While all diffusion indices are in expansion, the fact that employment is at its highest level since the survey began provides another boost in the arm for the sector,”

The proportion of positive comments from manufacturers was well up on results from previous months, which “all bodes well for a healthy end to 2014”,  Ms Beard says.        

The report reveals New Zealand’s labour market is continuing to strengthen too; with annual employment growth reaching a respectable 3.2% in Q3, enough to nudge the unemployment rate down from 5.6% to 5.4%.

The results indicate positive employment intentions are being acted on, suggesting the outlook for manufacturing employment in 2015 is more positive than the past year, when it was flat after enjoying solid gains the previous year.

BNZ senior economist Doug Steel says New Zealand’s labour market continues to strengthen, with annual employment growth of 3.2% and the unemployment rate falling in the year to September.

He adds the PMI results suggest more improvements are likely in the final quarter of 2014.

In the North Island, the Northern region climbed back over the 60-point mark with a strong 60.2, showing sturdy activity for the month. 

The Central region continued to build on its momentum with a score of 56.6, its highest since March 2014. The Canterbury/Westland region increased 5.7 points to 61.6.

The Otago-Southland region stood out in the report, scoring a 70.6 and continuing its momentum from the previous month.

Jwalls@nbr.co.nz