New Zealand manufacturing has collapsed further, with a flattering run-down in dairy stocks disguising an awful three months of sales to the end of March.
BNZ Capital senior economist Craig Ebert said people could be forgiven for thinking New Zealand's manufacturing sector performed well in the March quarter, especially in relation to collapsing industrial production internationally.
First-quarter sales slipped just 0.9% in nominal terms and rose a seasonally-adjusted 0.2% in volume.
"March-quarter manufacturing sales looked steady only because of a massive draw-down in previously bloated inventory of dairy products - a pattern also consistent with the recent `rebound' in dairy exports.
"They were not reflective of better production."
Dairy production and processing was thought to have fallen in the March quarter, partly related to the weather and partly because processing companies were sending a strong message to farmers to ease back a bit as they struggled to sell stock amid tumbling prices, he said.
There was a similar feeling about manufactured meat products, where the rising sales belied an underlying contraction in processing.
The clearest signs of weak manufacturing production came from the ex-agriculture components of the Statistics New Zealand figures, Mr Ebert said.
Sales slumped a seasonally-adjusted 6.5% to be 14.7% lower than June last year, just before the global slump began in earnest.
The weakness was across virtually all sub-categories of non-agricultural manufacturing.
Few had escaped the global carnage, he said.
All of that implied manufacturing would be a significant sore point for the first-quarter GDP accounts, which were due on June 26.
March-quarter GDP was estimated to have again contracted.
The final word on first-quarter activity would be out tomorrow when energy production statistics were published, Mr Ebert said.
Those statistics included electricity and gas production, and oil output, which was becoming increasingly important to understand, given the emergence of the Tui and Maari fields.
