Sharechat Logo

Manufacturing weakens for fifth month

Thursday 16th October 2008

Text too small?
New Zealand manufacturing activity fell in September, extending its contraction to a fifth month on declining orders and lower production in an economy at risk of extending its recession through 2008.

Manufacturing rose to 47 in September, seasonally adjusted, from 45.7 in August, according to the Bank of New Zealand-Business NZ Performance of Manufacturing Index. A reading below 50 indicates a contraction.

The figures come amid rising concern that the US economy will tip into recession this quarter and demand will slow worldwide. The central bank has embarked on its steepest easing cycle since 2001 to revive growth, betting that the slowdown will help reduce inflation that may have peaked at 5.1% in the third quarter.

"The world economy is giving up the ghost of its inflationary past," said Craig Ebert, senior markets economist at Bank of New Zealand. "That has to be bad news for a local economy already well in the grip of recession."

The central bank will cut the official cash rate 100 basis points to 6.5% next week, according to the consensus on estimates compiled by Reuters. The rates decision is due October 23, three days after the Statistics Department releases third-quarter inflation figures that are forecast to show an annual rate of 5.1%.

The central bank is required to keep inflation, on average, at between 1% and 3%.

The PMI diffusion index for production was at 45.5 last month and new orders were at 48.8. Employment was at 44.7, a record low, suggesting manufacturers will extend job cuts. Finished stocks was little changed at 50.2 and deliveries of raw materials was at 48.8

A regional breakdown shows the North Island has been hit hardest, with the northern region at 45.9, the ninth monthly contraction, and the central region at 46.2. In the South Island, the Canterbury/Westland was at 51.6 and Otago/Southland was 53.9.

By Jonathan Underhill



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Greenfern Industries Limited (NZX: GFI) Releases Interim Results
Hallenstein Glasson Holdings Limited (NZX: HLG) Announcement of Final Dividend
26th November 2021 Morning Report
EROAD Limited (NZX: ERD) Accelerates Towards Next Phase of Growth
Green Cross Health Limited (NZX: GXH) REPORTS STRONG HALF YEAR PROFIT OF $9.7M
Stride Property Ltd & Stride Investment Management Ltd (NZ: SPG) Placement Size Increased Following Strong Demand
General Capital Limited (NZX: GEN) Announces Very Strong Growth
25th November 2021 Morning Report
Gentrack Group Limited (NZ: GTK) Annual Results for the Year Ended 30 September 2021
Pacific Edge Limited (NZX: PEB) Results for Six Months Ended 30 September 2021