Manufacturing still in decline for most regions

Media release

16 March 2006

Manufacturing activity still in decline for most regions

Manufacturing activity in February showed expansion for the first time in five months, although largely due to expansion in the Canterbury/Westland region, according to the Business NZ Performance of Manufacturing Index (PMI).

February’s seasonally adjusted PMI, at 51.2 was the highest result since August 2005, and 3.2 points higher than 48.0 recorded in the first month of 2006.

A PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining.

PMI values for February in 2003, 2004 and 2005 ranged between 54.1 and 56.3.

Expansion in manufacturing during February was mainly due to strong activity in the Canterbury/Westland region (59.4). All other regions displayed various levels of decline, with the worst being the Northern region (46.8).

Encouragingly, production (52.3), new orders (53.1) and deliveries (51.7) all showed expansion in February, while employment (47.0) and finished stocks (47.2) continued to drop.

Although the result for February shows a slight bounce back from a period of five months in decline, comments from manufacturers regarding current conditions for manufacturing still point to a fragile sector with orders slow to pick up. While the high New Zealand dollar continues to bite, its recent fall should enable manufacturers to compete more on the international market. However, the flow-through of that exchange rate drop into overseas orders may be some way off yet.

ENDS

Full results are available on www.businessnz.org.nz under ‘PMI Reports’.

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