Manufacturing activity remained in expansion but clear division lines are drawn, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for January was 50.5 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was down from 51.6 in December but up from 46.5 in November. The January 2012 result was also the third lowest January value for activity since the survey began in 2002.

BusinessNZ’s executive director for manufacturing Catherine Beard said that the positive and negative comments from manufacturers outlined similar issues and influences, but with contrasting outcomes.

“For those experiencing positive influences to the start of 2012, seasonal effects combined with a pick-up in offshore orders, particularly from Australia, dominated headlines. At the other end, negative comments also picked up seasonal impacts as businesses closed over the holiday period, while there has been a drop off in orders from the European region.”

BNZ Economist Doug Steel said “It is good to see the January PMI hold onto the majority of its bounce in December. Sure it is not yet strong, but it is still positive and indicative of some forward momentum.”

Three of the five seasonally adjusted main diffusion indices were in expansion during January, led by production (51.7) and followed by employment (51.2). New orders (50.4) fell 1.8 points from December, while finished stocks (49.9) was generally unchanged in January. Deliveries (49.5) slipped back into contraction after a slight improvement the previous month.

Unadjusted results by region showed that activity was stronger the further one travelled south. The Northern region (43.0) fell back to its lowest level of activity since June 2009, while the Central region (45.9) improved 3.2 points from December but still in contraction for the third consecutive month. Both the Canterbury/Westland (51.3) and Otago/Southland (52.8) regions again experienced expansion, although the two South Island regions experienced a second consecutive drop in expansion. For the later, it was their lowest level of activity since July 2011.