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Middling May

13 June 2014

Middling May

Although still in positive territory, a second consecutive slowdown in expansion meant the manufacturing sector was at similar levels last seen over a year ago, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for May was 52.7 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). While this was 1.7 points lower than April, the sector has now been in expansion for 20 consecutive months.

BusinessNZ’s executive director for manufacturing Catherine Beard said that the lower level of expansion for May was mainly due to new orders coming down from recent strong levels.

“While new orders were at their lowest level since December 2012, comments from manufacturers were generally split into two camps on the issue. While some were noticing a lack or drop off in orders, others were experiencing continued demand and strong growth.

“Looking ahead, the fundamentals of both the PMI and other indicators of the economy still point to positive activity. However certain variables, such as the strong New Zealand dollar against the Australian, will likely cause some head winds.”

BNZ senior economist, Craig Ebert says, “While large chunks of the latest PMI remain encouraging, the interplay of softening orders alongside rising inventory counsels a bit of caution regarding the extent of manufacturing growth in the pipeline.”

All five seasonally adjusted main diffusion indices were in expansion during May. Production (55.2) again led the way for the current month with a value unchanged from April. In contrast, new orders(51.6) fell to its lowest level of expansion since December 2012. Employment (53.8) remained in healthy territory, despite falling 0.5 points over the month. Finished stocks (52.6) went back into expansion during May, while deliveries (51.4) dropped for the fourth consecutive month.

Three of the four regions were in expansion during May. In the North Island, the Northern region (57.4) increased 4.4 points, while the Central region (56.4) recovered most of the drop it experienced the previous month. In the South Island, the Canterbury/Westland region (56.7) showed solid expansion levels, while the Otago-Southland region (48.1) slid 9.6 points to record its first decline in activity since April 2013.

Click here to view the May PMI
Click here to view seasonally adjusted & unadjusted time series

PMl results are available on under ‘PMI Reports’. The BNZ - BusinessNZ PMI (performance of manufacturing index) draws on the depth of member companies associated with BusinessNZ: Employers and Manufacturers Association, Business Central, Canterbury Employers’ Chamber of Commerce and Otago Southland Employers Association. The survey is sponsored by Bank of New Zealand Ltd.


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