Domestic demand sets manufacturers rolling

By ELLEN READ

Good weather and strong domestic orders helped the country's manufacturers to end last year on a strong note, according to the ANZ-Business New Zealand performance of manufacturing index (PMI).

The index tracks the health of manufacturers, asking firms whether production, employment, new orders, raw material deliveries and finished stocks are higher or lower than the month before.

The overall index rose to 65 in November from 61.5 in October. A reading above 50 indicates manufacturing is expanding; the distance from 50 reflects the strength of the growth or decline.

Business New Zealand chief executive Simon Carlaw said seasonal factors such as pre-Christmas stockpiling gave the index a boost, but strong domestic demand was also helping manufacturers.

New Zealand manufacturing has expanded for the past four months, unlike the United States, Japan and the euro zone, whose PMIs were only just stabilising after a period of contraction.

All of the PMI sub-indexes (production, employment, new orders, finished stocks and deliveries) expanded in November.

All manufacturing industry sectors expanded but printing, publishing and recorded media and metal product manufacturing sectors had lower values.

Three of the four regions grew, with Central the best performer. Firms of all sizes expanded, with medium-large sized firms (those with 51-100 staff) doing best.



Bruce Goldsworthy, from the Employers and Manufacturers Association (Northern), said that unlike previous export-led growth, the current strength was based just as strongly on domestic sales.

"Manufacturers' celebrations would be noisier except for the subduing effects of the rising New Zealand dollar."