Manufacturing sector doing well

By BRIAN FALLOW

The manufacturing sector is going from strength to strength, according to the ANZ-Business New Zealand performance of manufacturing index (PMI).

The PMI takes the pulse of manufacturing monthly, 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 61.5 in October from 60.5 in September.

A reading above 50 indicates manufacturing is expanding; the distance from 50 reflects the strength of the expansion or decline.

Comparable indices for the United States, Europe and Japan are all below 50.

Australia's is in positive territory at 56.3 but has weakened slightly from last month. The Australian Government has shaved 0.75 per cent from its revised growth forecast next year to reflect drought impacts.

Business New Zealand chief executive Simon Carlaw said manufacturers were not yet talking about the Australian economy going off the boil. Concerns were more about the exchange rate, though currency sensitivity tended to depend on the degree of value added.

Seven of the eight manufacturing sectors recorded an expansion in new orders while the wood and paper manufacturing sector reported no change.

Overall employment expanded, apart from large firms (with more than 100 employees) which reported a decline in employment levels, though less so than in September.