Sharechat Logo

New Zealand's manufacturing activity slips in January

Friday 17th February 2017

Text too small?

New Zealand's manufacturing activity slipped in January from December and there may be further headwinds to come as the building sector's momentum loses some of its 'oomph'. 

The Bank of New Zealand-BusinessNZ performance of manufacturing index was a seasonally adjusted 51.6 in January, 2.6 points lower than December, and the lowest level of expansion since January 2015.  

The manufacturing sector has remained in expansion in almost all months since October 2012, barring a blip in January last year when the PMI slipped into contraction with a reading of 49.8. The economy has been buoyed by a construction boom that started in the post-earthquakes Christchurch rebuild and has extended to Auckland's housing market.

BNZ senior economist Craig Ebert said the slowdown was mainly due to a marked slowdown in the production index "which dampens expectations of a big bounce in the PMI over the short term." 

Ebert said much of the weakness was in areas such as textile, clothing, footwear and leather, wood and paper products and printing, publishing and recorded media. However, he also sounded a note of caution regarding manufacturing's dependence on the local construction cycle as some building indicators have "lost oomph" over recent months, with December new dwelling consents falling for the second month in a row while the rebuild in Canterbury is maturing.  

"If construction's strong run is tiring then it will remove a tailwind the local manufacturing industry has enjoyed for a good few years now," Ebert said. 

New Zealand's domestic manufacturing sector is typically linked to construction and the Canterbury rebuild revived the sector when manufacturers went through a period of contraction following the global financial crisis and local finance sector collapse.

Today's figures show the PMI's production sub-index sagged to 51.1 versus 56.9 in December. Employment dipped to 51.5 versus 52.0 in the prior month, new orders were virtually unchanged at 52.5 versus 52.4. Finished stocks were 50.4 versus 51.7 while deliveries dipped to 53.2 versus 54.4.

BusinessDesk.co.nz

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares mixed; Ryman and Stride gain on results, Port of Tauranga, A2 Milk drop
NZ dollar heads for 1.4% weekly gain on Fed's cautious inflation view
Commerce Commission to appeal High Court decision on price-fixing case
Commerce Commission to appeal High Court decision on price-fixing case
Northport issues 'vision for growth' which would see wharf double in size to accept increased business
Social enterprise Conscious Consumer attracts $2M to fund UK launch
OG Oil & Gas extends offer to allow time for regulatory approval
NZ trade deficit widens in October as demand for imported machinery outstrips primary export growth
NZ structural log prices rise to 24-year high, A-grade export logs hit record
Only the fittest, most savvy retailers will survive - and Warehouse positing to be one of them

IRG See IRG research reports