Meat and dairy decline offsets manufacturing growth

Oil tanker Kakariki heads into Otago Harbour past Harington Point (left) and The Spit. Photo by Craig Baxter.
Oil tanker Kakariki heads into Otago Harbour past Harington Point (left) and The Spit. Photo by Craig Baxter.
Manufacturing volumes across the country rose in the quarter to December, but a 4.8% decline in the value of meat and dairy saw overall values down 1.9% for the period.

Statistics New Zealand business indicators senior manager Neil Kelly said petroleum and coal product manufacturing, which can have large movements from quarter to quarter, led the December increases.

"Meat and dairy manufacturing sales were also up following a large increase in the previous quarter,'' he said.

Westpac senior economist Michael Gordon said the manufacturing sector finished 2015 "on a strong note''.

Sales volumes rose by 1.3% in the December quarter, which followed a 3.3% rise in the September quarter.

"While food manufacturing gave back some of the previous quarter's gains, there was growth in other areas, such as textiles, wood, minerals, and petroleum processing,'' Mr Gordon said.

ASB senior economist Jane Turner said the key figures to focus on were manufacturing activity, excluding meat and dairy.

While sales volumes were a bit softer than expected, up more than 1% quarter on quarter, an accumulation of inventory suggests that production lifted closer to 2%, she said.

"The key uncertainty on the outlook is if this lift in inventory is temporary, or indicative of an unexpected decline in demand,'' Mrs Turner said.

She noted the monthly manufacturing index had ‘‘remained robust'' in the early months of 2016, suggesting underlying demand remained strong.

"Meat and dairy sales volumes were slightly stronger than expected,'' she said.

"However, we anticipate that production actually fell, led by a decline in livestock slaughter.''

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