NZ manufacturing activity eases in March, weighed by production index

Friday 13th April 2018

New Zealand's manufacturing activity eased in March, weighed on by a slide in the production index that edged close to contraction.

The Business NZ-BNZ performance of manufacturing index fell to a seasonally adjusted 52.2 in March from 53.3 a month earlier, remaining above the 50 level separating expansion from contraction.

Three of the five sub-indexes declined, with production falling 2.9 points to 50.8, employment down 1.2 points to 53.5, and new orders decreasing 0.4 points to 53.8. Finished stocks rose 3.3 points to 53.8 while deliveries were up 0.5 points to 53.2.

"The weak spot in March’s PMI was its production index. With a seasonally adjusted outcome of 50.8 this was close to stalling. Compare this to February’s 53.7 and the exceptionally high reading of 61 back in November and a sense of sharp deceleration arises," said Bank of New Zealand senior economist Craig Ebert.

Ebert said the New Zealand Institute of Economic Research's quarterly survey of business opinion pointed to a similar outcome this week among manufacturers. With respect to output over the past three months, only 6 percent reported an increase. Manufacturers, however, were more upbeat looking ahead with 28 expecting increased output over the next three months.

He also said the fact that the employment index remains above its long-term average "tends to dial down the idea that the PMI is in the throes of stalling overall."

Business NZ manufacturing executive director Catherine Beard said the pace of expansion leveled off in recent months, but the number of positive comments from respondents outweighed negative at 55.1 percent, a pick up from February when they numbered 51.4 percent and January when they numbered 50.7 percent.

(BusinessDesk)

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