New Zealand's manufacturing sector may be about to "turn the corner" toward expansion as employment in the sector, new orders and deliveries all picked up in October, the BNZ-Business New Zealand Performance of Manufacturing Index (PMI) shows.
Despite the pick-up, the sector remained relatively static in October, with a PMI reading of 49.7 indicating a slight contraction in overall activity during the month. A reading over 50 indicates expansion of activity in the sector, while a reading below 50 indicates contraction.
"While the flat patch has gone on now for three months, having new orders and employment slightly on the expansion side of the ledger is a positive indicator that New Zealand manufacturing might be able to turn the corner soon," BusinessNZ’s executive director for manufacturing Catherine Beard said.
“Those making positive comments in the survey seem to be those that are focused on exporting to the Australian market or have some seasonal things going their way," Beard said.
Here is the release from Business NZ:
October saw little change from September regarding activity in manufacturing, as the sector remains fairly static and still not quite able to get into expansionary territory, according to the BNZ - BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for September stood at 49.7, a slight improvement on September’s result (49.5) but not much of a movement (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This is the third consecutive month sitting on 49, though on the positive side there are now three of the five indices, employment, new orders anddeliveries sitting at just over 50.
BusinessNZ’s executive director for manufacturing Catherine Beard said that while the flat patch has gone on now for three months, having new orders and employment slightly on the expansion side of the ledger is a positive indicator that New Zealand manufacturing might be able to turn the corner soon.
“Those making positive comments in the survey seem to be those that are focused on exporting to the Australian market or have some seasonal things going their way.”
“In terms of how we are tracking against other manufacturing countries, Australia is also flat in October on 49.4, with the high Australian dollar and weakness in new orders creating challenges. The JP Morgan Global Manufacturing PMI is now showing expansion (53.7) with the US and China hitting five and nine month highs respectively.”
BNZ economist Doug Steel said there were good bits and bad bits to October’s results, which broadly net each other to continue the plateau of recent months.
“The bad bits seem centred on the here and now, most noticeably in production. The housing market also remains soft and the effects of the earthquake have kicked in. Canterbury/Westland was the only region where the PMI came in below 50.”
“The good bits were concentrated on new orders and employment. There were also pockets of positivity regarding exports, but external demand conditions are still far from uniform. Respondents’ remarks cover the full spectrum of perspectives. Of those that mentioned particular markets, there was a general positive Asia/Australia and negative US/Europe theme, which is in line with the present lopped-sidedness of global economic growth.”
Of the five seasonally adjusted main diffusion indices, the two that remain in contraction are production (46.0) and finished stocks (49.9), though it is hopeful that the slight expansion in new orders, employment and deliveries are signs manufacturing is turning the corner.
Unadjusted results by region showed some change in activity levels for most regions. All the regions were in expansion apart from Canterbury/Westland (49.5) down 3.3 points from last month. Of those in expansion, the Central region improved the most (7.1 points) to land on 54.8. Otago/Southland was a close second improving 6.3 points to land on 53.7. Northern region went ahead 2.6 points to reach 56.3.
Performance of manufacturing index
Select chart tabs
7 Comments
But its flat.....so its not dropping...but what do you expect? the consumer is seriously tapped out and if not downright fearful, careful.
Plus all the noise about exports is a con IMHO.....there is no one to export to.....JK summed it up well we should be growing at 6%.......
Meanwhile outside of the beehive jobs are under threat, while my industry doesnt look too bad (IT) the jobs that are advertised are the poor employers and/or dont pay not well.....and other non-IT ppl around me seem really under pressure....
So until real confidence returns and some of that is the expectation that the Govn wont keep shedding jobs we will stagger on....
regards
Depends on where the "the stuff' is made, Gavin. We are importers of much of our goods. So the jobs we create by spending, are overseas. Buying, here, is just sending more of our wealth to overseas market to make more jobs there/ less jobs here. And how do we replace the purchasing power? Borrow, more....from the people that we have made the jobs for!
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.