Otago-Southland manufacturing shows growth

Otago-Southland continues to lead the way in regional manufacturing performance, which nationally booked a fourth consecutive month of expansion last month.

Otago-Southland, rated 57 on the index, the only region to reflect expansion. Northern (49.2), Central (49) and Canterbury-Westland (43.1) were all in contraction at below 50.

The good news is tempered however, as GDP data due out next month will possibly reflect a "double dip" recession under way in New Zealand.

The BNZ and Business New Zealand's monthly performance of manufacturing index reflects expansion when any of the four regions is rated over 50, and contraction when rated below 50.

BNZ economist Doug Steel said the economy was "flat-lining for now" and while he expected disappointment from GDP quarterly data next month, the 2011 outlook remained "bright". He cited economic positives including high commodity prices, global economic growth and Rugby World Cup tourism.

Chief executive of the Otago Southland Employers Association, John Scandrett, noted while Otago's rating for January had declined slightly to 57, the local sector outcomes continued on a positive track.

"When evaluating the December result we pointed to robust diffusion index markers, where new orders, production levels and raw material deliveries offered clear evidence of forward strength ..." he said in a statement.

The projections made in December materialised in the January survey, although Otago-Southland saw a slight easing in production and finished stocks indicators.

"Textile and clothing and food manufacturing activities have, overall, held positive survey positions in January but there is evidence of some contraction in machinery and packaging sub-sectors," he said.

Business New Zealand executive director for manufacturing Catherine Beard, said continued expansion of orders over the last five months was an encouraging indicator that the expansion would continue, "even if it is slow and steady".