NZ manufacturing flags; strong kiwi weighs on sentiment

Thursday 11th June 2009

New Zealand manufacturing activity slipped last month, remaining in contraction for a 13th straight month, with the strong kiwi dollar weighing on export industries.

Manufacturing fell 1 point to 42.7 in May from April, ending two months of gains, according to the Bank of New Zealand–Business NZ Performance of Manufacturing Index. A reading below 50 indicates a contraction.

The New Zealand dollar has climbed more than 20% against the U.S. dollar from its low in early March, and jumped to 63.71 U.S. cents today after the central bank left the official cash rate on hold at 2.5%. The economy is showing some signs on recovering from its prolonged recession though the revival is likely to be tepid, the central bank said today.

“Just when the global activity indicators, particularly around manufacturing, look to be stabilizing, the rising currency is causing another layer of concern for the local industry,” bank economist Craig Ebert said.

All five of the main diffusion indexes were in contraction last month.Production fell 1.4 points to 41.4 and employment declined to 43. New orders, at 41.3, returned to similar levels seen in March while deliveries of raw materials declined 0.6 points to 43.

Finished stocks fell 0.6 to a record low 45.5.

The JPMorgan Global PMI rose to a nine-month high of45.3 in May from 41.8 in April. The PMI for the U.S. rose to 42.8, the highest since last September, from 40.1 April. The Australian PMI climbed to a seven- month high of 37.5 from 30.1.

Businesswire.co.nz

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