Big gain in meat and dairy lift manufacturing to 15-month high

Monday 15th June 2009

Gains in the volume of meat and dairy sales boosted New Zealand manufacturing data into positive territory for the first time in 15 months.

Total manufacturing sales lifted a seasonally adjusted 0.2% in the first three months of the year, its first gain since December 2007, driven by a 23% increase in the amount of meat and dairy sold, according to data from Statistics New Zealand. The total value of sales slipped 0.9% in its third quarterly decline since March last year.

“The surprisingly strong export performance was driven by dairy product exports, which also showed up in the manufacturing sector data,” said Robin Clements, economist at UBS New Zealand. It “may have been the result of a run-down of stocks following the recovery in production from last year's drought and difficult international sales conditions in the final months of last year.”

The result snapped a string of four quarterly declines. Still, with some 89% correlation between with the manufacturing sector, excluding meat and dairy, with real gross domestic product, the economy probably extended its recession in the first quarter, and Clements predicts it shrank 1% in real terms.

Reserve Bank Governor Alan Bollard last week forecast the economy was facing a seven-quarters-long recession, with GDP shrinking 1% in the first three months of this year.

Petroleum and industrial chemicals, along with beverages, malt and tobacco were the only two other groups to realise sales growth in the first quarter of this year, with nine of the 12 industries showing a decline in sales volumes registering their second or more consecutive quarterly decrease.

Transport equipment marked the largest decline in volume as it tumbled 32% quarter on quarter, followed by the food sector, which slumped 9.1%.

Businesswire.co.nz

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