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Manufacturing output at 11 year low

Thursday 9th September 2010

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New Zealand manufacturing volumes fell 1.8% during the June quarter, the third consecutive decrease, and the lowest sales volumes since the September quarter of 1999, according to Statistics N.Z. figures released today.

However, the value of sales increased 3.1%, driven by a 13.9% increase in the meat and dairy industry. Excluding this category, value of sales dropped 2.2%.

“Confidence in the manufacturing sector has started to ease,” said ASB economist Jane Turner. “With doubts around the strength of the global economic recovery, exporting manufacturers feel more cautious about future activity.”

Meat and dairy products sales volumes dropped 1.3% during the June quarter, following a 9.3% fall in the March quarter, while volumes have fallen for the past year and are now 13.2% lower than in June 2009.

Dairy products were the main reason for the increase in sales values, as indicated by Fonterra’s rising indicative milk solids payout during the first half of the year. Dairy product manufacturing prices lifted 5.5% in the June quarter, while meat and meat product manufacturing was up 4.3%.

Other food manufacturing saw sales volumes fall 5.7% for the June quarter, following a 9.3% drop in the previous three months. This includes the production of seafood, fruit and vegetables, animal and bird feed, bread, cereals and baking mixes, cakes and pastry, oils and fats, flour, confectionary, biscuits and sugar.

The value of sales in the sector fell 2.4% in the June quarter, following an 8.3% fall in the previous quarter.

The falls in both these quarters were driven by drops in volume, with price movements, as measured by the producers price index, recording an increase for both quarters.

Other sectors to experience a sales volume fall were textiles and apparel down 9.6%, beverages, malt and tobacco down 6.8% and structural, sheet and fabricated metal products down 5.6%.

Partly offsetting these decreases was a 15.1% increase in the basic metal industry for products such as iron and steel, basic non-ferrous metals and non-ferrous basic metal products.

This sector had an historically low volume of sales in the December 2009 quarter, but roared back in the March quarter with a 14.3% rise.

Businesswire.co.nz

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