Results for the month of June confirm a solid and expansionary first half of the year for the manufacturing sector, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The PMI is a monthly activity survey of manufacturers operating in export and domestic markets. The PMI is administered by BusinessNZ, representing thousands of exporters and other businesses.
The seasonally adjusted PMI for June was 54.7 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). While this was 4.3 points lower than May, it was still in solid expansionary mode. Compared with previous June results, the 2013 value was the highest since the June 2004 result. Overall, the first half of 2013 has averaged a healthy 55.7, compared with only 49.6 for the previous six months.
BusinessNZ’s executive director for manufacturing Catherine Beard said that the June result complements a positive six month trend for the sector.
“While another result like that of May would have been warmly welcomed, the June result still had enough punch to indicate the sector is certainly in better shape than it has been for some time.
“New orders and production continue to hold up, which is a key element for overall growth in the sector. Also, employment has now been in positive territory for 3 of the last 4 months, while comments from exporting manufacturers report continued steady demand for their products.”
As BNZ senior economist Craig Ebert points out, “If we were to line up all available PMI and QSBO-manufacturing data against the wall, then their main confession would be of a sector now making clear progress, after a patchy year last year.”
Given the on-going healthy levels of activity in the sector all five seasonally adjusted main diffusion indices were again in expansion for June. Production (55.5) led the way in June, while new orders (55.1) were close behind. Both these two indices have been the main drivers of overall expansion in the sector in recent months. Employment (51.9) remained in expansion, although down 3.4 points from the previous month. Deliveries (55.4) remained at a stable level of activity, while finished stocks (52.7) also experienced a higher level of activity from May.
Expansion was experienced in most parts of the country in June. The Northern region (56.0) continued to show solid growth, although down 4.5 points from the previous months. After three very strong months of expansion, the Canterbury region (53.3) experienced a lower level of activity for June. The Otago/Southland region (53.2) remained in expansion for the second consecutive month, while the Central region (49.5) fell back to show slight contraction in June.