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Strong growth in manufacturing continues

Media release
December 13, 2007

Strong growth in manufacturing continues

Expansion levels in the manufacturing sector last month were the highest since May 2006, according to the Business NZ Performance of Manufacturing Index (PMI).

Although November’s seasonally adjusted PMI of 57.2 saw a rise of only 0.1 points from October, it continued to record a solid period of activity in the sector. The previous time the PMI had reached that level was May 2006 (also at 57.2) and it’s now almost three years since that level was exceeded, in December 2004 (59.0). The average PMI value since the survey began is 54.6.

A PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining. PMI values for November in the years 2002-2006 ranged from 44.6 to 58.2. The 2007 result was the third highest November value, with those in 2002 and 2004 showing stronger activity.

Business NZ chief executive Phil O’Reilly says the November result indicates a healthy year-end for manufacturers, with a generally positive mood prevailing.

He says that while most of the negative comments from manufacturers continue to centre on the persistently high value of the New Zealand dollar in most countries, the November results contain many positive aspects.

“Activity levels are strong in all regions, with most displaying their highest levels of expansion in four years. Employment as an indicator was also at its highest level since 2003, suggesting that despite the struggle to obtain staff at present, some manufacturers are managing to increase staff capacity.

“At an international level, it is pleasing to see New Zealand sitting comparatively well in its level of activity in relation to other countries. Also, we are well ahead of the global manufacturing PMI value (which New Zealand contributes to) that shows global manufacturing displaying only moderate growth,” says Mr O’Reilly.

Unadjusted activity for November showed expansion across all regions for the fourth consecutive month. The two South Island regions recorded post-70 values, led by the Canterbury/Westland region (71.8). The Otago/Southland region (70.2) nudged just above 70, while the Central region (63.1) built on activity increases from October. The Northern region (59.7) experienced a slip in expansion, but the value for November was the second highest during 2007.

All five seasonally adjusted main diffusion indices continued to record expansion for the fourth consecutive month. Three diffusion indices showed increased expansion from October, with new orders (58.9) leading the way with its highest value since October 2006. This was closely followed by production (58.6), while employment (56.1) recorded its highest value since November 2003.


Results for the various manufacturing industries were positive throughout November, with some sectors showing significant activity. The petroleum, coal, chemical & associated product sector (73.8) continued to build on strong activity and led the way for November. The food, beverage & tobacco sector (72.1) recorded its highest level of expansion since November 2002, due to very high production activity.

Full PMI results are available on www.businessnz.org.nz under ‘PMI reports’ or by clicking on the following links:
November PMI
Seasonally adjusted time series

ENDS

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