Manufacturing in expansion

Manufacturing in Otago-Southland has swung from contraction to expansion but nationally the index remains flat, with losses generally cancelling out gains.

The Business New Zealand performance of manufacturing index is broken down into four regions - Otago-Southland, Canterbury-Westland, Central and Northern.

While all but Canterbury-Westland remained in expansion compared with last year, the national index was almost unchanged from September and comparable to October last year - hovering around the break-even 50 mark.

In the index, readings below 50 reflect contraction and above 50 expansion.

BNZ economist Doug Steel said the national index had been sitting around the 50 mark over the past four months, noting gains and losses in October "broadly net each other out".

"This gives the sense that the manufacturing sector has reached a plateau in recent months, following a rather sharp but short bounce earlier in 2010," Mr Steel said in a statement yesterday.

Chief executive of the Otago Southland Employers Association John Scandrett said the 6.3-point improvement to 53.7 for Otago-Southland manufacturing, from September to October, represented a "solid result" when aligned with the rest of the country.

"Only in Canterbury have we seen some October slippage but, under the post-earthquake circumstances being experienced in that area, this was not unexpected," he said in a statement.

The data was reinforced by positive regional comment across export-connected food and packaging sub-sectors, and there was "sound feedback" which showed "concrete gains" were also being made in marine manufacturing, Mr Scandrett said.

However, it was clear from the data various textile and wood product operations were falling short of what were regarded as acceptable standards, Mr Scandrett said.

It was encouraging that through August-October forward momentum was seen in finished stocks, deliveries and new orders, which augured well for the November survey results, he said.