Stability continues – PMI
The manufacturing sector continues to show expansion at a moderate but consistent level, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for July was 53.0 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 0.4 points lower than June, although it continues the trend of the sector now being in expansion for 22 consecutive months.
BusinessNZ’s executive director for manufacturing Catherine Beard said that results over the last four months show that the PMI has reached a level of expansion that is consistent with moderate growth.
“Since the survey began in 2002, the long term average level of activity for the PMI has been 52.7, with results over the last four months sitting at or above that. While we have experienced 15 months of strong expansion prior to April, recent results show that the sector is still clearly in positive territory.
“In addition, comments from respondents still remain on the upbeat side, with the pick-up in new orders evident with a number of comments associated with increased orders/demand, both domestically and offshore.”
BNZ senior economist, Doug Steel said, “Recent surveys point to a manufacturing sector in good spirits. While manufacturers are not quite as confident as they were earlier in the year, optimism remains above average levels.”
All five seasonally adjusted main diffusion indices were in expansion during July. New orders (55.0) led the way for the first time since March, with an increase from 52.2 in June. In contrast, production (54.0) dipped 1.9 points from the previous month to its lowest point since March 2013. Employment (51.3) also dipped, dropping 1.4 points from June, while finished stocks (51.5) returned to positive territory. Deliveries (53.3) dropped 1.9 points after a strong pick up the previous month.
Two of the four regions were in expansion during July. In the North Island, the Northern region (57.5) rose 6.9 points to return to almost the exact level of expansion as May. In contrast, the Central region (46.6) fell into contraction for the first time since January. In the South Island, the Canterbury/Westland region (52.3) experienced a lower expansion rate, while the Otago-Southland region (45.0) slipped further into contraction, which it has now been in for three consecutive months.
For media comment: Catherine Beard 0274 633 212 or Doug Steel (04) 474 6923