For the third consecutive month, Otago Southland manufacturing is in contraction, at its lowest level since 2009.
It is the lowest of the four regions represented in the BNZ Business New Zealand performance of manufacturing index, released yesterday.
An index rating above 50 expresses expansion, and below 50, contraction.
While Canterbury-Westland, Northern and Central were also in contraction for April, at 42.2, 46.2 and 49.2 respectively, Otago-Southland languishes at 38.3 on the index. Nationally, the index sits at 48.
Chief executive of the Otago Southland Employers' Association, John Scandrett, described the result as "unpalatable", especially given Otago-Southland had led the index for several months last year, and into 2012.
"For the third month in a row, the Otago-Southland manufacturing survey result has us squarely in contraction mode and it is somewhat unpalatable to have to recognise that this April reading is the lowest nationally and is the lowest we have seen here since May 2009," Mr Scandrett said.
Nationally, two of the index's sub-indexes, employment and finished stocks, were in slight expansion, but it was the negative results of production, 44.6, and new orders, 48.5, weighting down the overall result.
The overall index contraction prompted Labour's economic development spokesman, David Cunliffe, to single out Otago-Southland as an example where manufacturing was "down drastically".
"This [index slump] is on top of the Government's decision to turn a blind eye to the disastrous consequences of closing KiwiRail's Hillside Workshops," Mr Cunliffe said in a statement yesterday.
BNZ head of research, Stephen Toplis, said the index had been on a "roller coaster" in recent months, suggesting a challenging environment for manufacturers.
The trend had been mildly positive during those months, but it highlighted more than usual monthly volatility in performance.
"Planning can only be more difficult with such choppiness," Mr Toplis said in a statement yesterday.
The local index at just 38.3, delivered a "very clear message that currently not all is rosy in the regional manufacturing garden", Mr Scandrett said.
"The [goods] demand elements in April appear to have fallen away beyond what we would have predicted at this time last month and survey comment is strongly negative about this fact.
"There is also recognition that a high dollar has not served to assist export-focused manufacturers," Mr Scandrett said.
Specific references of a positive nature reveal forward movement in selected textile and wood product manufacturing activities, the former citing improvements seen in the Japanese market.
