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NZ manufacturing growth slows in June from 9-year high, still hearty

Thursday 11th July 2013

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New Zealand manufacturing activity remained in hearty expansion mode last month, while slowing from a nine-year high in May, with new orders and production driving growth.

The BNZ-BusinessNZ performance of manufacturing index fell 4.3 points to 54.7 in June, the highest result for a June month since 2004. A reading above 50 indicates the sector expanded, while one below shows contraction.

The survey follows the New Zealand Institute of Economic Research's quarterly survey of business opinion earlier this week, showing manufacturers were much more upbeat about the state of the economy, and were expecting higher outputs, exports, and profitability in the coming quarter.

"We take this week's PMI and QSBO as further evidence New Zealand's manufacturing industry is in relatively good heart," BNZ economist Craig Ebert said in his report. "From a bumpy 2012, manufacturing production has developed a clear expansive tone to it this year."

The PMI showed production led expansion in June with a reading of 55.5, down from 60.5 in May, followed by new orders at 55.1, down from 63.1 a month earlier. Employment dropped to 51.9 from 55.3. Deliveries rose to 55.4 from 54.6 and finished stocks increased to 52.7 from 51.8.

Metal product manufacturing showed the most activity across the industry sub-groups at 58.5, falling from 61.3 in May, followed by machinery and equipment manufacturing at 56, down from 67.4.

Food, beverages and tobacco manufacturing fell to 52.8 from 61.4, petroleum, coal, chemical and associated product manufacturing dropped to 52.1 from 62.1 in May, and textile, clothing, footwear and leather manufacturing was steady at 50.9.

Across the regions, Northern fell to 56 from 60.5 in May, Canterbury dropped to 53.3 from 67, and Otago/Southland declined to 53.2 from 60.7. Central region showed a small contraction at 49.5, falling from 55.4 in May.

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