July saw ongoing durability in New Zealand’s manufacturing sector, partly aided by our trans-Tasman cousins according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for July was 53.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). Although this was down slightly on the June result of 54.3, combined the last quarter of results represent the strongest level of expansion since early-mid 2010.
BusinessNZ’s executive director for manufacturing Catherine Beard said that the exchange rate story for New Zealand’s manufacturing exporters involves a few angles that need to be considered.
“There is no doubting that negative comments describing the overall value of the New Zealand dollar have increased from June as more manufacturers experience tighter competition for the exporting dollar. However, Australia remains a suitable destination for New Zealand exports given the ongoing competitive exchange rate by historical standards. We also need to throw in recent global economic turbulence which has seen the New Zealand dollar drop back on various currencies. How that plays out in terms of increased orders remains to be seen given jitters in the markets may also have an adverse effect on demand”.