Manufacturer optimism hits two-year high

Virginia Nicholls
Virginia Nicholls
Optimism abounds for Otago and Southland manufacturers as they head into Christmas, with the monthly performance of manufacturing index hitting an almost two-year high.

While nationally the BusinessNZ-BNZ performance slipped from 57.6 in September to 56.2 in October, Otago Southland leapt from 61.7 to 69.5, the highest level achieved during the past 23 months.

Scores above 50 represent expansion, and below, contraction.

Otago Southland Employers’ Association chief executive Virginia Nicholls said category breakdown for Otago Southland were all above 60 and in "solid expansion", underpinned by construction activity, food manufacturing and aluminium boat production.

The sub-index production levels were at 76.7, employment 70, new orders and deliveries of raw materials were 66.7 and stocks of finished products were on 63.3.

"The positive news continued with the proportion of positive comments sitting at 93% which reflects the optimistic mood expressed by the manufacturers," Mrs Nicholls said.

Food manufacturers were busy preparing stock for the local Christmas season and export markets.

Construction industry suppliers had continued to be very busy, to complete jobs before Christmas, while aluminum boat builders were busy with solid domestic sales leading into summer, she said.

"The good news is that the concerns expressed around the general election were not reported by local manufacturers this month," she said.

Also busy were manufacturers supplying services to  irrigation projects, Mrs Nicholls said.

While the national index declined by 0.4 of a point, it had extended its run of expansionary readings above 50, for every month since October 2012.

BusinessNZ’s executive director for manufacturing Catherine Beard said the fundamentals from the October result "remained healthy".

BNZ senior economist Craig Ebert said New Zealand’s manufacturing sector was not put off by the recent transition to a new government. While the new Labour-led government was not proclaimed until October 19, Mr Ebert said he would wait to see how the index performed to year’s end "before awarding any merit certificates".

He said it might be too soon to assume  local manufacturing activity was boosted by the recent fall in the exchange rate.

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