After four months of flatness in the manufacturing sector, November finally saw manufacturing turn the corner with modest expansion in all regions and in all the indices measured, according to the BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for November stood at 52.7, an improvement on October (50.0) and an improvement across the board on the last four months (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). It is the first time in five months that all five indices, employment (50.7), new orders (52.3) deliveries (57.4) finished stocks (51.3) and production (55.4) have all been over the 50.0 mark.
BusinessNZ’s executive director for manufacturing Catherine Beard said that while the expansion was modest, it was solid across all the regions and indices measured.
“Having new orders in expansion, (albeit modest expansion) is a good forward indicator of continuing growth.”
“Those making positive comments in the survey again seem to be those that are focused on exporting to the Australian market or have some seasonal things going their way. This is supported by a recent ExportNZ survey which showed the respondents (which were mainly manufacturers) were feeling positive about growth in the next 12 months.”
“In terms of how we are tracking against other manufacturing countries, Australia remains flat in November on 47.6, with the high Australian dollar and weakness in new orders continuing to create challenges for them. The JP Morgan Global Manufacturing PMI is continuing to show expansion (53.9) and they are predicting the severe slowdown in manufacturing has reached the bottom.”
BNZ senior economist Craig Ebert questioned how bad a picture other surveys have painted of the manufacturing sector lately.
“Judging by the September quarter Statistics NZ manufacturing survey, very bad indeed. However, the latest PMI, readings from other business surveys, and export statistics, call into question the degree of slump in manufacturing output that has been suggested by Q3 manufacturing sales and inventory statistics.”
Unadjusted results by region showed an improvement in activity levels for all regions. The Northern region was up 5.2 points (61.5), Central region up 5.8 points (60.6), Otago/Southland region was up 12.3 points (66.0), while Canterbury/Westland seems to have rebounded from the effects of the earthquake and was up 11.5 points (61.0).
Click here to view the November PMI
Click here to view the PMI time series data
For media comment:
Catherine Beard 04 496 6560 or 027 463 3212
Craig Ebert 04 474 6799
