Manufacturers split in 2 camps
Manufacturers split in two camps: exporters, and home market suppliers
The divide between manufacturing exporters and those supplying the home market is evident in the July results of the ANZ-Business New Zealand Performance of Manufacturing Index (PMI) released today.
The PMI outcome overall for July shows New Zealand manufacturing scarcely growing with the PMI at 51.6 (over 50 indicates growth, under 50 contraction) though the construction boom continues.
>From the comments of survey respondents and other data, the economy has split into two camps, the results of which are levelling each other out, said Bruce Goldsworthy, Manager of Manufacturing Services for the Employers & Manufacturers Association (Northern).
"On the one hand, we have export dependent manufacturers struggling with the strong NZ dollar, and on the other there are those being buoyed along by the ongoing building boom," he said.
"While Statistics New Zealand reported that exports fell 11 per cent for the year ended June to $27.55 billion, Value New Zealand has just advised that house prices nationally have risen for the eighth consecutive quarter.
"Eighty per cent of respondents to the PMI survey in the northern region mentioned the constraint on their growth was caused either by the exchange rate, or that their good performance is dependent on the building phenomenon.
"Suppliers of building and building outfitting products are being supported as well by the resilience of the Australian housing market.
"But for exporters of other products, and for exports of products other than to Australia, the news is not encouraging. Elaborately transformed manufactures was the only export category to grow (by 1.5 per cent to achieve $8.76 billion) for the year ended June.
"The performance of other export categories demonstrates our present economic dependence on the housing market, with exports of dairy products (down 19.5% to $5.84 billion), meat and meat product manufacturing (down 7.3% to $4.6 billion) seafood processing (down 14.6% to $1.1 billion) scoured wool (down 30.4% to $369 million) and manufactured commodities (down 15.3% to $3.26 billion).
"A positive factor in the PMI
is that new orders are holding up at 52.3 (53.9 in the
northern region) though stocks of finished goods at 54.9
(50.0 in the north) are ahead of production levels at 49.2
(48.7 in the north). Employment levels are also still in
positive territory at 51.5 (52.6 last month).