Manufacturing activity slips into decline

Manufacturing activity continued to soften in October, with the ANZ-Business NZ Performance of Manufacturing Index (PMI) falling into decline for the first time since July.

The PMI had a reading of 49.6, in October down from 52.3 in September. A reading above 50 indicates expansion, while below 50 indicates a decline. The last time the index showed a decline was July, when it recorded a reading of 48.2.

The October activity showed manufacturing was much lower than the same time last year when the PMI had a reading of 56.7 and October 2003, when it was at 64.6.

Manufacturers said that uncertainty during the post-election period affected activity. The persistently high New Zealand dollar and rising fuel costs also increased costs for manufacturers.

Finished stocks was the strongest sub-index, at 51.5. New Orders also showed slight expansion at 51.5, but all other sub-indices were in decline. Production had a reading of 49.0; employment of 47.6; and deliveries 49.8.

Regional activity was stronger in the South Island than the North Island.

The Otago/Southland region showed the highest level of expansion, with a reading of 54.9. Canterbury/Westland recorded expansion for the first time since July, at 52.7. Northern declined, with a reading of 48.4, as did Central at 48.8.

- NZPA