Sharp bounce up in production and new orders in July PMI

Thursday 13th August 2009

New Zealand manufacturers report a sharp uptick in production and new orders and a further rundown of finished stocks in July, fuelling evidence of a "V-shaped" economic recovery, according to the BNZ Capital/Business New Zealand July Performance of Manufacturing Index.

With the JP Morgan Global PMI rising to the neutral 50 point mark in July - its highest point for 18 months - and New Zealand's PMI hovering just below that at 49.7, the local sector was now "agonisingly close to expansion", said Business NZ's ceo, Phil O'Reilly.

While three of the five seasonally adjusted main diffusion indices were still contracting last month, the two key indicators of production (51.0) and new orders (55.1) both showed expansion, giving production its highest value since April 2008, and new orders its highest value since December 2007.

Employment (44.0) showed some improvement from June, while deliveries of raw materials (47.6) lifted from three close results ranging from 43.0-43.5. Finished stocks (42.8) decreased another 1.2 points from June to reach its third consecutive new low since the survey began.

There was also encouraging news in the strength shown in the UK, whose PMI came in at a slightly expansionary 50.8 in July, the first G-7 country to break the barrier since the global credit crunch began a year ago, and improving indices across Europe, India and China.

Global recovery could be a double-edged sword for New Zealand if global prices improved but the Kiwi dollar stayed uncompetitively high.

"That said, a strong global economy and a strong New Zealand dollar are preferable to weakness in both," said BNZ Capital chief economist Stephen Toplis.

Businesswire.co.nz

Comments from our readers

No comments yet