Southern manufacturing rebounds

John Scandrett.
John Scandrett.
Otago and Southland's manufacturing sector has rebounded from a post-Christmas dip, returning to expansion and leading the country's four regions by a healthy margin.

Nationally, the BNZ-Business New Zealand monthly manufacturing index gained 5.2 points to hit 55.9, firmly into expansion and underpinned by sub-sector new orders, which should continue to flow through data in the months ahead.

The index measures output, with points over 50 in expansion, and below 50 in contraction.

Otago had fared strongly in December, on 66 points, then slumped to 46 in January, before rebounding to 60.7 for February - about five points ahead of the other three regions.

The Northern and Central North Island regions gained points, to respectively 54.9 and 55.4, while the Canterbury Westland region gained 7.5 points to 55.8.

The January data had revealed the Christmas holiday season appeared to have taken a toll on the manufacturing sector, with figures slumping to their lowest overall rate since December 2012.

Otago Southland Employers' Association chief executive John Scandrett described the February result as ''a positive well-rounded month's performance''.

''After a marginal post-Christmas dip in manufacturing activity levels, the February result returned us to the solid and consistent expansionary outcomes, last seen through the closing months of last year,'' Mr Scandrett said.

The February survey comments cited favourable foreign exchange rates, World Cup cricket tournament hype and successful supermarket promotional work, as supporting elements in the strong performance presented, he said.

However, there were selected negative references around the forecast low dairy payouts, which were impacting on some activities, he said.

Within the sub-indices of the overall survey, Mr Scandrett said Otago's production, new orders and deliveries were providing ''robust endorsement'' of the expansionary tracking patterns.

''We think the strength of these will anchor continuing forward momentum in the sector,'' Mr Scandrett said.

Business New Zealand's executive director for manufacturing Catherine Beard said after the lacklustre January results, February's increase was more in line with what had been seen during the last two years.

''Although all sub-indexes were positive, the fact that new orders recovered to show its highest value for over a year should flow through into manufacturing results in the coming months,'' she said in a statement.

BNZ senior economist Craig Ebert said it was a relief to see the index rebound from last month's ''oddly low result'', and both production and new orders jumping back up to healthy expansion territory.

''These were the main culprits for bringing the overall index down in January,'' Mr Ebert said.

ASB senior economist Jane Turner said January's weakness was ''very concerning'' and was across the board in terms of production, new orders and employment and in the wake of the surge in the New Zealand dollar against its Australian counterpart.

''With Australia the largest single market for New Zealand manufacturing exporters, the recent lift in the New Zealand dollar against the Australian has been concerning.''

However, she said the bounce-back in February was equally broad-based and indicated the manufacturing sector was continuing to perform well despite some headwinds for exporters.

Add a Comment