Otago-Southland just slipped into contraction in the latest BNZ-Business New Zealand performance of manufacturing index (PMI) for June.
While it was clear there was no solid manufacturing lift evident, it was also relatively comforting to note there had not been a significant drop-off in activity, Otago Southland Employers Association chief executive John Scandrett said.
The seasonally adjusted national reading for June dipped to 50.2. Manufacturing activity produced a mid-year flat patch, in line with offshore movements.
While the PMI details were mixed, the overall trends remained positive and indicated manufacturing made another positive contribution to GDP growth in the second quarter, BNZ economists said.
In Otago-Southland, it was "a case of steady as it goes", at least for the time being, and that appeared consistent with what was occurring in other regions, although there was some volatility in Canterbury/Westland, presumably around fluctuating opinion on rebuilding activity or lack of activity, Mr Scandrett said.
As with the previous month, evaluation of the Otago-Southland main diffusion indices presented further evidence of buoyant continuing activity across production and finished stock readings but again slippage was seen when delivery levels were evaluated.
"This tells us that in certain manufacturing sectors firms are maintaining their usual output momentum but are not necessarily finding market demand at levels that match or better their production capabilities," he said.
It was positive that besides steady production, employment indicators remained steady.
Locally, selected food and beverage, wood and textile and packaging activity had remained at reasonable levels but metal and machinery outcomes seemed to have dipped into contraction, he said.
The manufacturing sector faced significant pressures, particularly the high New Zealand dollar, FIRST Union general secretary Robert Reid said.
Exporters of non-commodity manufactured goods were still facing difficult times. There had been several major redundancy announcements recently, including at textiles firms Norman Ellison Carpets in Auckland and Summit Wool Spinners in Oamaru, and also at Goodman Fielder Frankton Meats in Hamilton. Mr Reid said New Zealand's high currency was "punishing" exporters.
