PMI stable with good outlook

By ELLEN READ

Manufacturing activity stayed steady in August although a higher level of new orders gave a more positive indication for the future.

The ANZ-Business NZ Performance of Manufacturing Index (PMI) for August was 51.9, up 0.3 points from July but down 6.3 points from August last year.

A reading above 50 indicates that manufacturing is generally expanding. A result below 50 shows contraction.

The overall August result was consistent with relatively stable manufacturing conditions.

"It has been mirroring growth in the economy generally, which was strong in late 2002. Having been close to [a PMI reading of] 50 since early this year suggests a general slowing in the economy," ANZ chief economist David Drage said.

The strength of the New Zealand dollar has added to exporters' woes.

The PMI is made up of five component indexes, four of which recorded expansion during August, although slower than in July.

The New Orders index was at 56.1 from 52.3 in July, showing that strong expansion is expected.

The August reading puts this index at its highest level this year, but it has fallen from the 61.2 level of August last year.

The employment index fell 0.7 points to 50.8 in August.

The production index, at 48.9 down from 49.2 in July, was contracting at a faster pace.

Compared with other countries, New Zealand's August PMI is similar to Australia (51) and Japan (51.1 for July), lower than the United States (54.7 in August) and above that of the Eurozone (48 in July).