NZ manufacturing activity shrinks in March quarter as meat, dairy weigh

Tuesday 9th June 2015

New Zealand manufacturing activity shrank in the first three months of the year as meat and dairy volumes declined in a period when global milk prices remained under pressure and parts of the country were stricken with drought.

The volume of total manufacturing fell a seasonally adjusted 0.3 percent in the three months ended March 31, turning around from two quarters of 0.6 percent growth, and up 0.4 percent from the same period last year, according to Statistics New Zealand. The quarterly decline was weighed on by a 1.5 drop in meat and dairy product manufacturing, the sector's biggest quarterly contraction since June 2013.

Among other sectors reporting a dip in the quarter included fruit, oil, cereal and other food manufacturing, which shrank 0.8 percent. Wood and paper product activity fell 0.6 percent, printing dropped 6.5 percent, chemical, polymer and rubber products declined 1.9 percent, and metal products manufacturing slipped 4.3 percent.

"Meat and dairy has fallen in four of the last five quarters, following a large rise in the December 2013 quarter," business indicators manager Neil Kelly said in a statement. "Without the meat and dairy contribution, the combined sales volume in the remaining 12 industries was unchanged, despite a large 12 percent rise in petroleum and coal products."

New Zealand's manufacturing activity has been expanding for the past 30 months, and the BusinessNZ Bank of New Zealand performance of manufacturing index due this week is expected to show the sector continue to grow, even as weak dairy prices and a slowing Australian economy sap some demand for industrial production.

Today's data shows the value of manufacturing sales fell a seasonally adjusted 2.8 percent in the quarter, its fourth successive decline, and was 6.8 percent lower than the same period a year earlier, at an unadjusted $23.76 billion.

Petroleum and coal product manufacturing was the stand-out in the series, with volumes up 12 percent in the quarter, even as values shrank 9.3 percent, while beverage and tobacco product volumes gained 1.7 percent for a 3 percent rise in the value of sales.

The value of raw materials ended the quarter at $3.62 billion, down 1.1 percent in the three-month period, and 3.3 percent below the same time a year earlier. Finished goods at $10.66 billion were 2.7 percent higher than the December quarter, though still 17 percent lower than a year earlier.

BusinessDesk.co.nz

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