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Manufacturing trend negative; pronounced in north

Media statement Friday, November 11th, 2005

Manufacturing trend negative; pronounced in north

The trend for manufacturing shows the sector’s October performance in decline, which will see the labour and skills shortages ease by early next year, the Employers & Manufacturers Association (Northern) says.

The trend is evident in the Business New Zealand Performance of Manufacturing Index (PMI), which is more pronounced in the north.
Yesterday’s good unemployment figures related to September.

“The PMI in October for the regions north of Taupo was 48.4 following an index of 52.1 in September, 54 in August and 44.8 in July,”said Bruce Goldsworthy, EMA’s Manager of Manufacturing Services.

“By contrast last year in October the PMI in the north recorded 56.8 and in October 2003 it was 64.2, both very substantial expansions in activity. (Above 50 indicates growth; below 50 signals contraction).

“Now, the sub indices of the PMI for New Orders, Employment and Deliveries all show a similar declining trend.

“With manufacturers employing 300,000 people in full time jobs with higher skills and better than average pay, these trends give us no reason to believe the present high employment rates will continue much longer.

“Very few of our sample this month of nearly 200 manufacturers in the north mentioned they were still facing staff shortages.

“The main blame for the decline is the ongoing strength of the NZ dollar which has all but eliminated exporters margins and causing intense price competition on the home market from imports.

“Other factors include the rise in fuel and transport costs, higher interest rates, slower Australian sales, and the general slowing in the local economy.

“As a consequence business confidence is falling away further.”


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