New Zealand’s manufacturing sector continues to meander along in a tight band as we head towards the end of 2012, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for November was 48.8 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 1.5 points down from October and means the index has only ranged by 2.8 points over the last six months. Over the last quarter, the PMI has averaged 49.2, and the year to date at 51.0.
BusinessNZ’s executive director for manufacturing Catherine Beard said that the November result continues the general pattern seen both here and offshore for the manufacturing sector.
“The last six months have seen little to write home about in terms of New Zealand manufacturing. Sluggish production and new orders has meant the overall result has had little chance to show stronger activity levels, while employment in the sector remains in contraction. However, we are no different from most other countries at present, as the JPMorgan Global PMI remains in decline, along with our closest economic neighbours across the Tasman fairing worse than us with overall activity down to 43.6.
BNZ economist Doug Steel said there were still many factors influencing manufacturing – some positive and some negative.
“While the overall results have been relatively stable of late, there continues to be considerable variation in the details. The accumulating evidence of improvement in construction activity gives some cautious optimism for 2013, amid some obvious strong headwinds such as the strong NZ dollar and patchy international demand.”
Two of the five seasonally adjusted main diffusion indices were in expansion in November. However, the key indices of production (49.3) and new orders (50.0) showed minor contraction and no change respectively. Finished stocks (53.4) continued its upwards momentum with its fourth consecutive monthly rise, as well as its highest result since August 2011. Deliveries (51.8) also showed some expansion, while employment (48.2) fell back 0.9 points from October and now in contraction for six months.
Given the main seasonally adjusted result taking into account Xmas activity, it was no surprise that the unadjusted results by region displayed expansion across the country. The Otago-Southland region (65.0) led the way with a strong result, although down on the same period last year. The Canterbury/Westland region (62.0) also showed strong activity, with a level similar to May this year. While the Northern region (56.6) experienced its third consecutive monthly improvement, the Central region (51.7) slipped back from its October result.