NZ manufacturing slows in August, remains in expansion

Thursday 15th September 2016

New Zealand manufacturing activity expanded at a slower pace for a second consecutive month in August, although it remained in expansion.

The Bank of New Zealand-BusinessNZ performance of manufacturing index fell to a seasonally adjusted 55.1 in August, from 55.5 in July and 57.5 in June. A reading of 50 separates expansion from contraction and the latest reading is above the long-term average of 53.1.

New Zealand's manufacturing sector has been in continuous expansion since October 2012, except for January last year when it slipped into contraction with a reading of 49.8. The economy has been buoyed by a construction boom that started in the post-earthquakes Christchurch rebuild and has extended to Auckland's housing market.

In the latest monthly data, new orders accounted for the most rapid expansion with a reading of 59.1, up from 58.1 in July, followed by deliveries which advanced to 55.9 from 55.1. Production achieved the third-highest reading of 55.7, although it lost some momentum, slipping from 57.8 in July, and finished stocks advanced to 50.7 from 49.2.

Employment was the only measure to slip into contraction, falling to a four-year low of 47.4 in August from 54.4 in July.

"The idea that employment in the manufacturing sector might be weakening needs to be flagged," Bank of New Zealand senior economist Craig Ebert said in his report. "Still, we'll need to see the PMI results for September, even October, before concluding anything on the trend."

A regional breakdown on an unadjusted basis showed Otago/Southland fell into contraction with a reading of 48.8, from 53.7 in July, while Canterbury weakened to 52.6 from 53.8. In the North Island, the central region advanced to 58.5 from 54.6 while the Northern region gained to 57.2 from 55.8.

Metal products manufacture slowed abruptly to 47.7 from 59.

BusinessDesk.co.nz

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