Manufacturing activity dips but still positive

Media release

Manufacturing activity dips but still positive

The month of June showed a dip in activity levels for manufacturers, but continues a series of positive results over the last five months, according to the Business NZ Performance of Manufacturing Index (PMI).

June’s seasonally adjusted PMI, at 52.1 was down 6.2 points on May, and very similar to activities levels during the earlier months of 2006. At this stage the January result has been the only month to show any decrease in activity.

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

PMI values for June in 2003, 2004 and 2005 were 52.2, 61.2 and 51.2 respectively.

Activity by region showed a consistent pattern in the North Island but contrasting results in the South Island. The Canterbury/Westland region (46.7) continued to alternate between positive and negative results, with a decline in June after a strong May value. In contrast, the Otago/Southland region (60.4) experienced its fourth consecutive increase in activity to show the highest level of expansion for June. The Central (53.6) and Northern (53.2) regions experienced similar levels of moderate expansion.

Four of the five seasonally adjusted main diffusion indexes recorded expansion for June 2006, with most values indicating moderate expansion. New orders (55.2) again recorded the highest value for the month, while employment (46.0) experienced its lowest ever value, just eclipsing the 46.2 recorded in November of last year.

Despite the dip in activity for June, the percentage of positive comments (45.3%) compared with negative comments (54.6%) from manufacturers was almost unchanged from May. The reversing of trends over the last two years continues, with the domestic economy slowly softening but activity in the export market picking up. Given the lack of comments it appears that the recent adverse weather had only a minor impact on activity.

Full results are available on http://www.businessnz.org.nz under ‘PMI Reports’. The Business NZ PMI (performance of manufacturing index) draws on the depth of member companies associated with Business NZ: Employers and Manufacturers Association (Northern), Employers and Manufacturers Association (Central), Canterbury Employers’ Chamber of Commerce and Otago Southland Employers Association.

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