New Zealand’s manufacturing sector started 2014 on a healthy note, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for January was 56.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). The sector has now been in expansion for 16 consecutive months, with the last six months also averaging 56.2.
BusinessNZ’s Executive Director for Manufacturing Catherine Beard said that despite the usual seasonal effects of Christmas and the holiday season, the sector has begun the way it finished off 2013.
“Positive comments from manufacturers revolved around a growing confidence by consumers, further gains in building construction and continued high levels of new orders, both domestically and offshore. In particular, the metal product sector is currently benefitting from the strong residential construction boom, which will no doubt continue for some months to come.”
BNZ Economist Doug Steel said it would be easy to understand if the PMI had lost a bit of heat in January, given the hefty lift in the NZD/AUD exchange rate. But the PMI has barrelled on, as domestic demand strengthens.
Three of the four regions were in expansion during January. In the North Island, the Northern region (53.1) experienced a lower level of expansion after three consecutive post-60 results. The Canterbury/Westland region (53.0) went back into expansion after a no change level during December. The Central region (48.8) remained unchanged in activity levels from the previous month, while the Otago-Southland region (56.4) continued to fall back in expansion from the previous month.
Manufacturing by industry sub-groups were mostly in expansion during January. Metal product manufacturing (59.3) rose 10.3 points from December to lead the way for January, while machinery & equipment manufacturing (54.5) dipped slightly in expansion from the previous month. Petroleum, coal, chemical & associated product manufacturing (41.3) experienced a sharp decline during January, which was mostly due to seasonal factors at play.