New index finds health in local manufacturing

By BRIAN FALLOW

A new indicator of how manufacturers are faring finds them on the buoyant side of neutral.

The ANZ-Business New Zealand Performance of Manufacturing Index (PMI) is a monthly survey of 300 manufacturing firms.

The index reflects firms' answers to questions about production levels, employment levels, new orders, stocks and deliveries of raw materials.

The number reporting a fall in those indicators over the last month is subtracted from those reporting a rise, to give a net level.

A PMI level above 50 indicates that manufacturing is expanding, a number below 50 that it is declining.

The survey's first result, for August, came in at 58.2 - better than scores of 50.5 in the United States and 51.6 in Europe, but weaker than Australia's 59.7.

The strength was widespread. All five component indices were in the expansion zone, with new orders especially strong at 61.2.

All four regions came in as expansive, Canterbury the strongest.

Firms of all sizes reported expansion, with the medium to large category (51 to 100 workers) doing best.

Seven of the nine industry sectors were on the positive side of neutral, the two exceptions being textiles and footwear, and non-metallic minerals.

While many firms reported strong export demand from Australia, there were signs of demand weakness from other countries, Business New Zealand said.

Firms still regarded the exchange rate as positive for exports, but fluctuations had caused concern.

The overall reading of 58.2 was consistent with other indicators that the manufacturing sector had been relatively robust in recent months, including Statistics New Zealand's quarterly survey of manufacturing which recorded a 2.9 per cent rise in sales during the June quarter.

It was also the largest contributor to an unexpected 1.7 per cent rise in gross domestic product in the June quarter.