Thursday 14th November 2013
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New Zealand manufacturing activity rose in October, indicating the sector is part of a broad-based economic expansion.
The BNZ-BusinessNZ seasonally adjusted PMI rose to 55.7 in October from a revised 54.2 in September, and is at the highest level for an October month since 2007. All major components of the PMI, including production, new orders, employment, inventories and deliveries of raw materials, posted readings above 50, suggesting growth.
“The ongoing strong PMI results and supportive details affirm that the manufacturing sector is part of the broad-based economic expansion,” Doug Steel, an economist at Bank of New Zealand, said in a note. “New Zealand’s economic expansion is broadening and deepening.”
The manufacturing sector has now been in expansion for 11 consecutive months, with the PMI averaging 56 so far this year, significantly better than last year’s average of 50.9. The Bank of New Zealand expects New Zealand’s economy may beat its expectation for gross domestic product growth of 3.2 percent next year and 2.2 percent in 2015.
The New Zealand dollar rose following the report and was recently trading at 82.91 US cents, from 82.51 cents immediately before the 10:30am release.
The latest survey marks the first October since 2006 that all industry sub groups have been in positive territory, with machinery and equipment manufacturing showing the strongest level of activity.
Manufacturing expansion was centred more towards the top and bottom parts of New Zealand in October, according to the survey.
In the North Island, the Northern region recorded its highest level of activity since November 2010 at 60.7, while the Central region dropped 4.9 points to 53.6. In the South Island, the Canterbury/Westland region recovered from its slip in September to 52.5 while the Otago-Southland region returned to similar levels in activity seen in August at 58.
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