Otago manufacturers buck national October slump

Manufacturing in Otago bucked a national dip in activity for October, with local production and new orders underpinning a third consecutive strong result.

In a separate survey released yesterday, consumer confidence chalked up its third consecutive monthly decline, with any positives expected from the Rugby World Cup period overshadowed by the uncertainty of global economics, the ANZ-Roy Morgan consumer survey found.

While nationally the BNZ-Business New Zealand performance of manufacturing index was down 4 points at 46.5 - its lowest since June 2009 and first decline during the past six months - Otago maintained a more than 60-point rating, rising slightly for the third month in a row to 60.8.

Index readings above 50 indicate growth, and below 50 a decline.

Otago Southland Employers' Association chief executive John Scandrett said despite the "sizeable" seasonally adjusted national dip in manufacturing activity, the Otago-Southland region "continued its patch of strong and stable growth".

"The two key elements of production and new orders remain healthy. Even employment, which has typically struggled to gain any momentum in recent times, has shown life over the last two months," Mr Scandrett said yesterday.

Business New Zealand executive director for manufacturing Catherine Beard said while the level of expansion had been slowly slipping in recent months, October's sudden drop nationally probably caught everyone by surprise - falling from positive territory of 50.5 points down to 46.5 points.

The October results were distorted by the Rugby World Cup causing distraction, expenditure switching and school holiday delays, along with the ebbing construction market.

"But there is a clear suggestion that a base is forming and a turning point is budding," Ms Beard said.

Specific reasons for the national decline included manufacturers in the northern region having experienced ongoing falls in production, while overall activity in the Canterbury-Westland region dropped considerably after three strong months, she said.

Mr Scandrett said recent feedback from Otago and Southland manufacturers revealed a gearing up towards pre-Christmas production.

"This is particularly evident in the food and beverage sector, ... standout performers in recent months."

There were some negative comments from manufacturers having to deal with the volatile currency cross-rate "landscape", meaning those producers where there was an emphasis on management of the foreign exchange variables, he said.

- simon.hartley@odt.co.nz