Building momentum – PMI
New Zealand’s manufacturing sector continued to show upwards momentum since the start of 2013, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for February was 56.3 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 1.1 points up from January and the highest result since February 2012.
BusinessNZ’s executive director for manufacturing Catherine Beard said that it was encouraging to see the February result exhibit stronger activity, most likely due to certain factors in the economy now starting to play out.
“Comments received from respondents who show increased activity are often associated with construction, such as the Canterbury rebuild or increased renovation work throughout the country. Given a large proportion of New Zealand’s domestic manufacturing activity is dependent on the construction sector, stronger demand for products such as paint, concrete, fixtures/fittings and related equipment will obviously provide the sector with a welcome boost.”
BNZ senior economist Craig Ebert said this month’s positive result reinforces the bank’s view that manufacturing is not “in crisis”.
“The figures speak for themselves. The way some people are talking, we should be witnessing a very weak, to plunging, PMI. In fact, it’s improved to a more positive level. While employment is still lagging, with production being the fastest growing in more than eight years, we have good reason to expect a pick-up in jobs to follow, especially with new orders picking up as well as they are.”
All five seasonally adjusted main diffusion indices were in expansion for February, the first time since May 2012. Production (61.4) led the way with its highest result since December 2004. This was followed by new orders (58.2), which recorded its strongest result since February 2012. Employment (50.1) did not display contraction for the first time since May 2012, while both finished stocks (51.8) and deliveries (53.9) both fell back from January levels of expansion.
All four regions experienced expansion in February. Both North island regions showed similar levels of expansion, with the Northern region (53.6) continuing to improve, while the Central region (53.8) recovered from two months in contraction. In the South Island, the Canterbury/Westland region (52.4) dipped 2.2 points, while the Otago/Southland region (57.2) returned to expansion after a sharp dip in January.
For media comment: Catherine Beard 04 496 6560 or 027 463 3212, Craig Ebert 04 474 6799