NZ manufacturing activity hits 7-month high on new orders, production

Thursday 15th October 2015

New Zealand manufacturing activity expanded to its highest level in seven months in September, with an uptick in new orders pointing to further improvements ahead.

The BNZ BusinessNZ performance of manufacturing index rose to a seasonally adjusted 55.4 last month from 55.1 in August, and was the highest level since February. A reading of 50 separates expansion from contraction.

The sub-sectors of the index showed improvement in production, new orders and deliveries while finished stocks and employment edged lower. Manufacturers noted solid domestic demand, improving conditions in Australia and a generally lower New Zealand dollar as positives, while negatives included dairy industry weakness, higher imported costs and other cost pressures. The manufacturing sector's activity has been growing for 36 consecutive months.

"The performance of manufacturing index was a picture of health in September, with particular strength in new orders and production," Bank of New Zealand senior economist Doug Steel said in his report. "The PMI suggests activity is expanding at a solid clip, even though manufacturers’ general confidence, according to other business surveys, has been dented. On balance, the strength in new orders suggests stronger sales growth over coming months."

The PMI showed the measure of new orders accelerated to 57.8 from 57.3 in August, while production advanced to 58 from 55.9 and deliveries increased to 56.4 from 52.9. Weighing on the index, employment slipped to 51 from 53 in August and finished stocks edged lower to 52.8 from 52.9.

The proportion of positive comments increased to 58.7 percent in September, from 57.2 percent in August, with respondents citing a more competitive New Zealand dollar, growth in new customers and seasonal factors.

BusinessDesk.co.nz

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