Further Fall In Manufacturing Activity

27 February 2004

Further fall in manufacturing activity

New Zealand manufacturing conditions continued to ease during January, according to the latest ANZ-Business NZ Performance of Manufacturing Index (PMI).

New Zealand recorded an overall PMI value of 51.4 for January 2004 (a PMI reading above 50 points indicates expansion and below 50 indicates decline). This was 2.6 points lower than the level recorded the previous month but close to the January 2003 value of 51.6. Despite the fall in January, the index nevertheless recorded slight expansion, with the fall-off in activity after Christmas a feature of the seasonal pattern in the aftermath to the lead-up to Christmas.

Four of the five sub-indexes recorded expansion in January (production, new orders, finished stocks and deliveries). While the finished stocks sub-index recorded slight expansion, its low value continues to indicate high inventory turnover due to strong sales.

Only Canterbury/Westland indicated strong expansion. The other three regions recorded no significant change.

The continued upward movement of the New Zealand dollar against the US dollar remains a strong concern among manufacturers. Some firms noted that labour shortages have restricted their ability to respond to new orders.

Full results are available on www.anz.co.nz under 'ANZ Spotlight/Economics' and on www.businessnz.org.nz under 'PMI Reports'.

The ANZ-Business NZ PMI (performance of manufacturing index) is sponsored by business banking specialist ANZ Banking Group (NZ) Ltd and draws on the depth of member companies associated with Business NZ: EMA (Northern), EMA (Central), Canterbury Employers' Chamber of Commerce and Otago Southland Employers' Association.

ENDS

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