Manufacturing Expansion Slows In April
21 May 2004
Manufacturing expansion slows in April
New Zealand manufacturing expansion slowed in April but the outlook still remains positive, according to the latest ANZ-Business NZ Performance of Manufacturing Index (PMI).
Overall New Zealand's PMI value increased in both February and March, peaking at 58.9 in March before slipping to 54.8 in April (a PMI reading above 50 points indicates expansion and below 50 indicates decline). This remains 5.5 points higher than April 2003.
Three of the five sub-indexes recorded expansion in April (production, new orders and deliveries of raw materials), while the employment index was broadly stable and the finished stocks sub-index recorded a moderate decline. The decline in finished stocks is encouraging as it suggests manufactures sales were higher than production in April. New orders (59.6) was again the highest of the sub-indexes, indicating a reasonable level of expansion is still expected. The continuing weakness in the employment sub-index implies ongoing productivity improvement in the sector.
Three of the four regions recorded expansion, with the Canterbury/Westland region indicating the strongest level of expansion. Production increased in Otago/Southland but the index was pulled down by a further decline in employment and a moderate decline in stock levels.
Some firms reported increased autumn investment in the rural sector, while increased domestic investment expenditure contributed to stronger growth in new orders in the machinery & equipment sector.
Export activity continues to be mixed, with some firms reporting a pick-up in new orders from Australia, Japan and the U.S., while others were still finding export orders difficult due to the value of the New Zealand dollar. The improvement in PMI scores in Australia (58.4), Japan (55.3) and the Eurozone (53.3) are positive for exporters and manufacturing expansion in the US (62.4) also remains at high levels
Some respondents expressed concern at competition from imports and higher raw materials prices in the chemicals sector.