Manufacturing still buoyant

Manufacturing activity in Otago and Southland during December remained buoyant and the sector can take heart after showing positive signs for steady expansion during 2011.

Of the four regions covered by the BNZ-Business New Zealand performance of manufacturing index, the December results of which were released yesterday, Otago, at 61.3, was well ahead of the pack, with Canterbury and Westland in contraction at 48.4 and Northern and Central recording 51.9 and 53.1, respectively.

A score of above 50 indicates expansion, while a score below that shows contraction.

The Otago result is the highest reading for a December period during the past six years. Nationally, the index stood at 53.1 for December, its third consecutive month above 50.

Otago Southland Employers Association chief executive John Scandrett said, while the December outcome was marginally back on November, "we are indeed still strongly in expansion mode".

Again, for December, there were robust diffusion index markers for Otago and Southland's new orders, production levels and deliveries of raw materials.

"It's likely that ongoing buoyancy will characterise our region's performance of manufacturing index readings into the first quarter of 2011."

BNZ senior economist Craig Ebert said the manufacturing slump in September had been a "real blow", prompting questions to be raised about the economic recovery process. However, the December results showed manufacturing was now "on track", with lifts in production levels.

While domestic deliveries had bounced back most, export sales remained the stronger sub-sector, he said.

Business New Zealand's executive director for manufacturing Catherine Beard said, given earlier positive results, it appeared manufacturing was entering 2011 "on a firmer footing".