Rural slowdown being felt by suppliers

John Scandrett.
John Scandrett.
Some suppliers to the Otago-Southland rural sector are starting to feel the pinch with the region's manufacturing activity only marginally remaining in positive territory.

The BNZ-BusinessNZ Performance in Manufacturing Index for April had Otago-Southland on 53.8 points.

A reading above 50 indicates expansion and the higher the number, the stronger the expansion.

Canterbury-Westland was on 50.3, central on 55.4 and northern on 54.1.

The New Zealand seasonally-adjusted index reading was 56.5, up 1.8% on March.

Otago-Southland Employers Association chief executive John Scandrett said March's PMI for the southern region was "steady as it goes'' in marginally expansionary territory.

The April result had aligned closely to the same tracking pattern.

"It appears the April outcome is reflective of low and slow general activity in the agribusiness, rural construction and machinery sub-sectors.

"This tells us regional farmers are feeling the economic pinch with low lamb and dairy returns and that their development planning has, in many cases, gone on hold for the time being.''

On the flip side, there was positive feedback for the month across selected wood and paper, boat building and textile manufacturing activities, he said.

Finished stocks were at higher levels in April than production and deliveries and the overall message was while expansion ruled now, there might be a slight slowdown soon.

ManufacturingNZ executive director Catherine Beard said the proportion of positive comments in the index remained above 60%.

Comments centred on general market growth and increased orders, particularly from offshore.

The April result represented another solid month for the sector.

BNZ senior economist Doug Steel said the bounce in April not only arrested the previous mild momentum loss but affirmed the above-average growth the manufacturing sector had displayed for many months.

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