Manufacturing stays flat in South

Manufacturing across the country has been in expansion mode for 22 consecutive months now - but Otago-Southland has just booked a third consecutive month of contraction.

Otago Southland Employers' Association chief executive John Scandrett said the ''overall picture'' of Otago-Southland's three-month contraction was based on several negative aspects.

Some local operators were continuing to face foreign exchange difficulties, there were the effects of the global mining slowdown and also slower than usual winter season sales. A reading above 50 denotes expansion, and below, contraction.

Nationally, the BNZ Business New Zealand seasonally adjusted performance of manufacturing index fell to 53 for July from 53.3 in June, but Otago was down to 45, the lowest of the four regions, while Northern and Canterbury Westland were both still in expansion.

Mr Scandrett said, ''As in recent months, production is flat-lining at realistic levels but the associated, and now needed, new order trending patterns are not being seen,'' he said of Otago-Southland.

However, amid the flat July result there were positives and some upbeat comments from the food and beverage, textile and clothing sectors.

''This feedback has covered references to export market steadiness, to selected successful promotional strategies and to a welcome dip in dairy product raw material prices, Mr Scandrett said.

Bank of New Zealand senior economist Doug Steel said the country's manufacturing sector had proved resilient in the face of a strong New Zealand dollar, which eroded the value of overseas sales, BusinessDesk reported.

''Those headwinds have receded as the kiwi has come off its highs and manufacturers are also likely to benefit from local sales into the construction industry,'' he said.

Nationally, all five sub-indexes were in expansion.

New orders rose to 55 from 52.2 in June while production fell 1.9 points to 54, the lowest level since March last year.

Employment fell 1.4 points to 51.3.

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