NZ manufacturing activity reaches highest since 04

NZ manufacturing activity reaches highest level since 2004, led by production: PMI

May 13 (BusinessWire) – New Zealand manufacturing activity rose to the highest level since December 2004 last month, as new orders drove production at a faster clip, adding to indications that the sector will be a major contributor to the nation’s economic growth.

The BNZ-Business N.Z. Performance of Manufacturing Index March figure increased 2.2 points from March to 58.9 and was the highest reading for a month of April since that year. Production, one of the five seasonally adjusted diffusion indexes that make up the PMI, climbed 2.8 points to 63 on a scale where 50 marks the difference between contraction and expansion.

The relatively healthy state of manufacturing, which fell in a hole through the recession, builds the case for Reserve Bank Governor Alan Bollard to begin taking his foot off the accelerator, the imagery he used in a recent speech for the return to interest rate hikes. The economy resumed its growth in the second quarter of 2009 but hasn’t returned to its pace of 2007.

The economy “is perhaps in the sweet spot in some ways,” said Doug Steel, economist at Bank of New Zealand. “The Reserve Bank starts thinking this growth is starting to get some legs.”

New orders climbed 3.7 points to 61, employment rose 2 points to 52.2, finished stocks were at 53.4 and deliveries climbed 1.5 points to 58.7.

New Zealand’s PMI reading outstrips that for the JPMorgan Global PMI, which rose to 57.8 last month, buoyed by growth in production and new orders that are “amongst the highest in the survey history,” according to the local release.

Most notable, the U.S. PMI reached a 75-month high of 60.4 and Australia’s rose to 59.8.

(BusinessWire)