Southern manufacturing enjoying uptick

Photo: Getty Images
Photo: Getty Images
Otago-Southland manufacturers are starting to get busier, judging from the latest results of the BNZ-BusinessNZ Performance of Manufacturing Index (PMI).

Activity in the region’s manufacturing sector for April was 57.8 points, up from March’s 55.9 and just above the average from last year of 57.1.

Business Central recorded the highest reading of 62.1 points, the Northern EMA was on 54.4 and the Canterbury Employers Chamber of Commerce was 50.9.

Otago-Southland Employers Association chief executive Virginia Nicholls said the regional breakdown showed expansion in new orders, deliveries of raw materials and employment levels. Stocks of finished products stayed the same at 50.A reading above 50 indicates expansion. The higher the number, the stronger the expansion.

"Manufacturers are reporting good new orders, which is positive for the months ahead. Construction is the standout player, having steady work across the sector."

This year, tourists had been coming to New Zealand later than previously expected, she said. The late arrivals had been positive for the manufacturers from the textile and clothing sector.

Metal product manufacturing was also reporting a busy season and there were good New Zealand and export sales.

The proportion of positive comments was sitting at 72%, Mrs Nicholls said.

The New Zealand seasonally-adjusted PMI for April was 58.9, 5.8 points higher than March, and the highest level of expansion since January 2016. BusinessNZ executive director for manufacturing Catherine Beard said the sizeable pick-up in expansion was welcome, especially given the overall activity results for the past four months.

"Although April represents a good result for the sector, the key will be to continue the expansion momentum over the coming months."

BNZ senior economist Doug Steel said the latest results were a "a move from so-so to outright strong".

The results might have been, in part, artificially boosted by the timing in Easter. However, the April results suggested the economy had not "fallen off the rails".

In April, the food, beverage and tobacco PMI posted its fourth consecutive monthly reading of 53, a marked slowdown from last year’s average of 61, he said.

Meat processing was unusually but understandably weak in the three months ended March, following a weather-induced early livestock kill in the December quarter.

The lack of meat processing would be a drag on manufacturing gross domestic product (GDP) in March. The PMI suggested at least some stabilisation early in the second quarter, Mr Steel said.

The employment index had remained solid during recently lower readings in the likes of production and orders.

The ongoing firmness in employment had been one factor behind keeping a more generally positive outlook, despite the cooling in other areas.

Manufacturing-filled jobs in April were up 2.5% on a year earlier.

The PMI suggested strong growth had continued into the second quarter, he said.

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