New Zealand manufacturing activity fell in July while remaining in expansion for the 22nd straight month as an increase in new orders made up for a dip in production and employment.

The BNZ-Business NZ seasonally adjusted performance of manufacturing index fell to 53 from last month from 53.3 in June from a downwardly revised 52.6 in May, although below 54.9 in June last year. A reading above 50 indicates expansion in the sector.

The manufacturing sector in New Zealand has proven resilient in the face of a strong New Zealand dollar, which erodes the value of overseas sales. Bank of New Zealand senior economist Doug Steel said. Those headwinds have receded as the kiwi has come off its highs and manufacturers are also likely to benefit from local sales into the construction industry, he said.

All five diffusion indexes in the PMI were in expansion in the latest month. New orders rose to 55 from 52.2 in June while production fell 1.9 points to 54, the lowest level since March last year. Employment fell 1.4 points to 51.3.

Finished stocks rose back into expansion at 51.5 while deliveries slipped 1.9 points to 53.3. The Northern region recorded the strongest growth last month, rising 6.9 points to 57.5, while central fell to 46.6, the first contraction since January. Canterbury/Westland recorded 52.3 and Otago-Southland fell further into contraction at 45.