South leads manufacturing

Ready-mix concrete activity is increasing in Otago-Southland in line with overall manufacturing...
Ready-mix concrete activity is increasing in Otago-Southland in line with overall manufacturing expansion. Photo by Craig Baxter.
The South Island received more good news with the release of the latest manufacturing activity statistics showing Canterbury-Westland and Otago-Southland leading the pack.

The BNZ-BusinessNZ Performance in Manufacturing Index showed Canterbury-Westland on 63.7 points, Otago-Southland on 62.7, northern on 62 and central on 52.8.

The national reading was 55.2 points, down 3.7 on the previous month although still showing expansion. A reading above 50 indicates expansion with the higher the reading the bigger the expansion.

Last week, South Island employers led a national survey in seeking new employees to boost their teams for next year.

Otago-Southland Employers Association chief executive John Scandrett said the regional November survey had again followed through positively from the previous month's performance.

For each November since 2009, the region had been at the ''strong end'' of the index scale.

''That is positive, especially when one reviews the wide-ranging diversity of manufacturers taking part in the survey.''

For the November PMI, there were good reports from operators with manufacturing interests in boat-building, pet food, wood and paper, brushware and textile and clothing manufacturer, he said.

However, there were mixed results from the food and beverage and metal products manufacturing sub-sectors.

The November sub-indices were all tracking in positive territory but Mr Scandrett noted a slight dip in the finished stocks reading and that reduction might well be a signal some operators were falling behind as far as matching their production to keep up with current market demand.

BNZ senior economist Craig Ebert said New Zealand's third-quarter manufacturing sales and inventory data inferred a ''nice bounce'' in the industry's production - more so than the 0.4% increase in sales volumes that had been reported by Statistics New Zealand.

That amount, along with the rebound assumed for agricultural processing in the third quarter, and technical support from inventory building, had the BNZ judging that there had been a 2.5% increase in manufacturing output in the third quarter.

''This profile certainly aligns with the pick-up we've seen in the monthly Performance in Manufacturing Index since around mid-year.

''The 2.5% lift we estimate for the third-quarter manufacturing production provides a solid backbone to the 0.9% expansion we are looking for with respect to September GDP.''

There was a lot of heat in the ready-mixed concrete production statistics, he said. While annual growth edged up to 23.2% from 22.9%, it implied a 7.9% lift in the September quarter alone. That was the strongest quarterly increase since June 2012 and pushed the latest quarter past that of the previous peak, which was in 2007.

The biggest gains were coming from outside of the Christchurch and Auckland metropolitan areas. The likes of Waikato, Bay of Plenty, Otago, Southland and Northland were on the increase, Mr Ebert said.

The Reserve Bank would present its new TWI-17 trade-weighted exchange rate today.

The 17-country index would look noticeably different to the TWI-5 index used at present, mainly because China's renminbi currency would be brought in with a weight of about 20%, from effectively being zero-rated.

The TWI-17 should not have material impacts on monetary policy thoughts and conclusions, he said.


At a glance

• South Island leads manufacturing activity.
• Otago-Southland continues its strong November tradition.
• Plenty of heat in ready-mix concrete statistics.
• New trade-weighted index released today.


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