Slowing of manufacturing expected

Craig Ebert
Craig Ebert
The stalling of manufacturing activity in the South Island last month was understandable, as it was the first survey since February's earthquake in Christchurch, BNZ senior economist Craig Ebert said yesterday.

"Still, there remains enough positive aspects, including robust employment intentions, to suggest the manufacturing will continue to recover overall, having rebounded well in the fourth quarter of last year."

Given the events of the earthquake, it was decided not to run the February Performance in Manufacturing Index (PMI). To compensate for the missing data for that month, the values for March had also been applied to February with standard seasonal adjustment taking place.

The BNZ-BusinessNZ seasonally adjusted PMI for March 2 was 50.1 points, the second consecutive monthly decrease in expansion. A reading above 50 indicates expansion, and below 50 contraction.

Mr Ebert said it was hard to know what to make of the March PMI. It had stalled, but that was hardly a surprise.

Canterbury was understandably down. While new orders overall were not encouraging of any immediate production rebound, employment intentions remained positive.

The situation in Canterbury set a cautionary tone around performance and expectations.

The region's PMI slumped to actual 42 points when it would normally have been expected to increase, based on seasonal patterns. Compared with a year ago, it was down 8.8 points.

Otago, while also weak, experienced less of a fall to 44.3.

The central zone increased to 53.1 and the dominant northern region fell to 52.4.

"We have our fingers crossed that New Zealand's manufacturing sector will be very much part of the pick-up we expect for the economy as a whole."

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