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Manufacturing activity improves

Media release
14 July 2005

Manufacturing activity improves

Manufacturing activity showed a slight lift during June, although the level of expansion was lower than that recorded in similar months.

The latest ANZ-Business NZ Performance of Manufacturing Index showed a June value of 52.2, up from 49.3 in May and 47.9 in April. Scores above 50 indicate that activity is expanding; below 50 indicate a decline.

The 2005 result for June followed a similar pattern of a pick up in activity from May to June, although the June 2005 value was lower than that recorded during June 2003 and 2004.

All regions experienced an increase in activity during June, led by the two South Island regions. The Otago/Southland (54.7) and Canterbury/Westland (54.4) regions displayed very similar levels of expansion, while the Central region (53.0) also showed moderate expansion. The Northern region (50.5) was close to displaying no change in activity.

The finished stocks (55.8) sub-index recorded the strongest level of expansion during June, while the new orders (50.9) sub-index recorded the lowest value of all the sub-indexes since the survey began in August 2002.

The June result represented further recovery from May, although in comparison with the same month in 2004 expansion is very moderate. The number of new orders from both domestic and international customers continues to be low, which may affect production levels in subsequent months.

ENDS

Full results are available on www.anz.co.nz under 'ANZ Spotlight/Economics' and on www.businessnz.org.nz under 'PMI Reports'. The ANZ-Business NZ PMI (performance of manufacturing index) is sponsored by business banking specialist ANZ National Bank Ltd and draws on the depth of member companies associated with Business NZ: Employers and Manufacturers Association (Northern), Employers and Manufacturers Association (Central), Canterbury Employers Chamber of Commerce and Otago Southland Employers Association.

MANUFACTURING ACTIVITY IMPROVES

ANZ-BUSINESS NZ PMI FOR JUNE 2005

The ANZ-Business NZ Performance of Manufacturing Index (ANZ-Business NZ PMI) is a monthly survey of the manufacturing sector providing an early indicator of activity levels. The ANZBusiness NZ PMI contains data obtained through Business NZ’s regional organisations: Employers & Manufacturers Association (Northern), Employers & Manufacturers Association (Central), Canterbury Employers’ Chamber of Commerce and Otago Southland Employers’ Association. When interpreting the data, a PMI reading above 50 points indicates manufacturing is generally expanding; below 50 indicates it is contracting; the distance from 50 indicates the strength of expansion or contraction.

KEY FINDINGS

The ANZ-Business NZ Performance of Manufacturing Index was 52.2 for June, the first sign of moderate expansion after two months of decline. However, the 2005 result was still lower than the June values for 2003 and 2004.

The level of expansion was fairly similar across the country, with the exception of the Northern region. The Otago/Southland and Canterbury/Westland regions recorded very similar expansionary values (54.7 and 54.4 respectively). The Central region (53.0) recorded its highest value since December 2004, while the Northern region (50.5) was close to showing no change.

Finished stocks (55.8) experienced the highest sub-index value since July 2003. Deliveries (53.9) also recorded moderate expansion, while the rest of the sub-indexes ranged in value between 50.9 and 51.9.

There were some industry groups that showed a healthy level of activity. The food, beverage & tobacco sector (58.5) recorded the highest value, followed by the machinery & equipment sector (57.1). In contrast, the wood & paper product sector (46.9) recorded a moderate decline.

For the first time in four months, all firms by size registered an expansion in activity for June.

Small-medium firms (11-50 workers) (53.3) again recorded the highest value during the month, followed by both large firms (101+ workers) (51.8) and medium-large firms (51-100 workers) (51.7). Micro firms (1-10 workers) (50.8) experienced close to no change.

The June result represented further recovery from May, although in comparison with the same month in 2004 expansion is still very moderate. The number of new orders from both domestic and international customers continues to be low, which may affect production levels in subsequent months.

PRODUCTION

The ANZ-Business NZ production diffusion index stood at 51.5, lower than the 63.6 recorded in June 2004 and almost identical to the 51.4 recorded in June 2003.

The metal product (58.8) and machinery & equipment (57.5) sectors showed healthy expansion, as did the food, beverage & tobacco (56.5) sector. In contrast, the wood & paper product (45.0) sector showed some decline.

Manufacturers in the Central region (52.4) again experienced the highest value for production during June, while the Northern and Canterbury/Westland regions both recorded slight expansion (51.4). The Otago/Southland region (50.0) showed no change.

EMPLOYMENT

The ANZ-Business NZ employment diffusion index (51.9) recovered from its lowest ever level of activity in May to record slight expansion in June. However, it was still lower than the values recorded in June 2003 and 2004.

Most industries experienced expansion in activity during June, led by the machinery & equipment (56.3) sector. The metal product (49.0) sector recorded a minor decline.

All regions except the Central region (49.2) recorded expansion in employment activity for June. The highest value was for the Otago/Southland (54.3), region, closely followed by the Canterbury/Westland (54.2) region.

NEW ORDERS

The ANZ-Business NZ new orders diffusion index for June (50.9) continued to record expansion during the month, albeit at a very modest level. However, it was the first time that it recorded the lowest monthly value compared with the other sub-indexes.

Although the food, beverage & tobacco (67.7) sector recorded particularly strong expansion, results for the other industries were mixed, with the wood & paper product (40.0) and petroleum, coal, chemical & associated product (42.6) sectors showing strong decline.

Both South Island regions, as well as the Central region experienced an increase in new orders during June. In contrast, the Northern region (47.7) recorded a moderate decline.

FINISHED STOCKS

The ANZ-Business NZ finished stocks (55.8) sub-index recorded the highest sub-index value in June for the first time since July 2003. The 2005 value was exactly the same as that recorded in June 2004.

The wood & paper product (67.5) sector recorded the highest level of expansion, while the food, beverage & tobacco (46.8) sector was the only one to experience a decline.

The Central region (60.3) experienced strong expansion in June, while the remaining regions recorded values between 52.3 and 58.7.

DELIVERIES

The ANZ-Business NZ deliveries of raw materials diffusion index stood at 53.9 in June.

The machinery & equipment (60.0) sector recorded strong expansion, followed by the metal product (57.8) sector.

Deliveries of raw materials was close to no change for the Northern region (50.9), while the Otago/Southland region (60.9) recorded the strongest level of expansion for June.


National Indexes / June 2003 / June 2004 / May 2005 / June 2005
ANZ-Business NZ PMI / 53.2 / 62.2 / 49.3 / 52.2
Production / 51.4 / 63.6 / 49.7 / 51.5
Employment / 52.6 / 56.0 / 47.2 / 51.9
New orders / 53.7 / 67.7 / 50.7 / 50.9
Finished stocks / 54.6 / 55.8 / 48.5 / 55.8
Deliveries / 55.2 / 61.4 / 49.2 / 53.9

Regional Indexes* / June 2003 / June 2004 / May 2005 / June 2005
ANZ-Business NZ PMI / 53.2 / 62.2 / 49.3 / 52.2
- Northern / 50.2 / 63.6 / 49.4 / 50.5
- Central / 52.3 / 60.8 / 50.1 / 53.0
- Canterbury / Westland / 56.4 / 62.4 / 48.9 / 54.4
- Otago/Southland / 61.7 / 56.1 / 46.8 / 54.7

*Regions (grouped according to Business NZ’s associated regional organisations)

Northern (Employers and Manufacturers Association (Northern)): Northland, Auckland, Waikato, Bay of Plenty

Central (Employers and Manufacturers Association (Central)): Gisborne, Hawke’s Bay, Taranaki, Manawatu, Wanganui, Wellington, Nelson, Tasman

Canterbury/Westland (Canterbury Employers Chamber of Commerce): Canterbury, Marlborough, West Coast

Otago/Southland (Otago Southland Employers Association): Otago, Southland

Next ANZ-Business NZ PMI (July results): 12 August 2005

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