Manufacturing expansion highest since 2004 – PMI

Manufacturing expansion highest since 2004 – PMI

New Zealand manufacturing continues to be in expansionary territory for April, reaching its highest value since 2004, according to the BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for April stood at 58.9. This was up 2.2 points from March, indicating the sector has left behind the recessionary depths it plunged to between 2008 and 2009.

A PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining. The April 2010 result was also the third consecutive month that all the main indices (production, new orders, employment, finished stocks and deliveries) were in expansionary mode.

BusinessNZ’s Executive Director for manufacturing Catherine Beard said that the New Zealand results fit well with the global manufacturing scene, with the JP Morgan Global PMI, the USA PMI and the Australian PMI all in strong positive growth territory.

“The performance of the manufacturing sector is critical to the employment scene in New Zealand, since it is the biggest employment sector in the Auckland region and the second largest employment sector in the country overall. The continued slow and steady expansion in the sector is finally flowing through to new jobs, which is good news for the unemployed and good news for the economy.”

BNZ economist Doug Steel said, “What a difference a year can make! There’s been a marked turnaround from the terrible conditions of 12 months ago when firms were shedding labour and manufacturing firms of all sizes were contracting.

“Now, all firm size categories are moving forward, with production and new orders leading the recovery charge, and the employment and restocking phase kicking in over recent months.

“Encouragingly, this improvement is widespread occurring across all components, industries, regions and firm-size categories. While there are still some negative comments in survey responses, the advancing manufacturing sector will certainly help offset patchiness or even outright weakness in some other parts of the economy.”

All five seasonally adjusted main diffusion indices remained in expansion – the third consecutive expansion across all main indices since the end of 2007. Production (63.0) was the highest value, up 2.8 points on last month. New orders (61.0) remain healthy and are up 3.7 points from March. Employment (52.2) has expanded another 2 points from March and is the highest it has been since the end of 2007. Finished stocks (53.4) were in positive territory for the third month running after a prolonged period in contraction, while deliveries (58.7) rose 1.5 points to stand at its highest result since November 2004.

Unadjusted results by region showed all were in expansion during April. This was again led by the Canterbury region (58.0), followed closely by the Central region (56.6) which was previously in contraction. Northern stood at 54.3, while Otago/Southland (53.4) slipped from March, albeit still showing expansion.

Click here to view the April PMI
Click here to view the PMI time series data

For media comment:
Catherine Beard, ph 0274 633 212 or Stephanie Moakes, ph 04 496 6554 or 021 959 831
Doug Steel, ph 04 474 6923

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13 May, 2010

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