Otago-Southland manufacturers have easily retained their top
ranking in the latest BNZ-BusinessNZ performance in
manufacturing index and there are indications of more good
news to come.
The region scored 56.4 points in the January PMI, well ahead
of next-placed Northern on 53.1, Canterbury-Westland on 53
and Central on 48.8. In January last year, the
Otago-Southland PMI was 48.1. The seasonally adjusted New
Zealand PMI was 56.2.
A reading above 50 indicates expansion and below 50,
Otago-Southland Employers Association chief executive John
Scandrett told the Otago Daily Times it was noteworthy
January new orders were strong at 66.7 points and deliveries
were trailing at 52.8.
''This may provide an indication that in February, and
beyond, the present expansionary trends will prevail.''
He was satisfied the solid regional PMI for January reflected
continuing confidence in the sector even though there were
marginal slowdown signs across selected food and beverage,
light industry and machinery operations.
Wood and paper product manufacturing overall tended to be
demonstrating signs of sluggishness, but one operator in the
sector expressed confidence that leveraged off a large
contract in process, Mr Scandrett said.
BNZ economist Doug Steel said the manufacturing sector had
started the year by expanding firmly.
''Manufacturing growth continues despite the general strength
of the New Zealand dollar and the particular recent strength
we have seen in the local currency against its Australian
It would be easy to understand if the PMI had lost some heat
in January, given the more than 14% rise in the NZ-Australian
dollar cross rate in the past 12 months. But the PMI had
barrelled on, he said.
The dollar was still causing concern, many survey respondents
noting the strength of the dollar as a negative influence on
their activity. Others noted the slowdown in Australia as
generally a drag on business.
Such results were expected given Australia accounted for
around 50% of New Zealand's total manufactured exports,
including processed primary products.
What was more surprising was many other respondents commented
on Australia as being a source of improvement, some noting
outright strength, Mr Steel said. It fitted with the recent
bounce in Australian business confidence, he said.