NZ manufacturing continues expansion, pace slows from September

Friday 13th November 2009

New Zealand manufacturing continued its expansion for a second month, albeit at a more moderate clip as the measure of employment fell back into contraction.

The BNZ Capital-Business NZ Performance of Manufacturing Index (PMI) slipped 0.9 points to 50.6 in October from September, when it turned positive for the first time in 19 months. A PMI reading above 50 points indicates manufacturing activity is expanding, below 50 points indicates contraction.

The PMI's tentative reading last month underlines the tepid pace of recovery in an economy that just managed to climbed out of recession in the second quarter, with growth of 0.1%. Reserve Bank Governor Alan Bollard has held off raising interest rates like his Australian counterpart though some economists predict he will begin tightening in April.

“It’s unlikely to be all strongly onwards and upwards from here,” said Craig Ebert, senior economist at Bank of New Zealand. “The economic improvement we envisage still looks like being a gradual one, choppy in its composition, and not without risks of major disappointment overall.”

Of the five diffusion indexes in the PMI, production slipped to 51.2 from 51.6 in September. New orders fell 2.3 points to 53.4, employment fell to 46.5 from 51.2, deliveries of raw materials sank to 49 from 51.1 and finished stocks climbed to 47.4 from 44.4.

New Zealand’s PMI lagged behind the JPMorgan Global PMI last month of 54.4, a 39-month high, and the U.S. PMI at 55.7. Australia’s PMI fell 0.3 points to 51.7.

Businesswire.co.nz

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