NZ manufacturing dragged down by weak meat, dairy
NZ manufacturing dragged down by weak meat and dairy sales
By Paul McBeth
Dec. 8 (BusinessWire) – New Zealand manufacturing was dragged down by weak meat and dairy sales in the September quarter, though excluding these sectors it began to show signs of recovery.
Total manufacturing sales shrank a seasonally adjusted 1.4% to $13.6 billion in the three months ended Sept. 30, according to Statistics New Zealand, while the value of sales declined 5.1% to $18.5 billion. Volumes are calculated by removing the effect of price change from values. Removing meat and dairy, volumes rose 1% to $9.4 billion and values decreased 0.8% to $13 billion. Meat and dairy volumes slumped 7.1% to $4 billion and sales tumbled 16% to $5.4 billion.
“With NZ and global demand starting to stabilise and renewed momentum in growth in Australia, the outlook for manufacturing is improving,” said Jane Turner, ASB economist. “We estimate that seasonally-adjusted stocks also declined, suggesting that manufacturing production fell much further than we had expected.”
The BNZ Capital-Business New Zealand Performance of Manufacturing Index showed manufacturing expanded in September and October after 19 months of contraction. Its tentative return to growth has underscored the slow pace of recovery in New Zealand which has encouraged Reserve Bank Governor Alan Bollard to keep loose monetary policy, even as his Australian counterpart hiked rates for three months in a row.
Of the 14 manufacturing industries surveyed, six showed increased, six declined, and two were little changed.
Gains in manufacturing volumes were led by basic metal, which climbed an unadjusted 22% to $392 million, while wood products rose a seasonally adjusted 9.1% $878 million. Basic metal also led gains in total value of sales, rising an unadjusted 15% to $673 million, and transport equity climbed an unadjusted 12% to $615 million.
Turner said the weak manufacturing volumes and new building work “indicates substantial downside to our previous forecast for production GDP” and ASB now predicts a “fractional decline” in third-quarter gross domestic product.
Salaries and wages across all manufacturing industries declined 2.8% to $2.8 billion and are down 5.3% from a year earlier. Meat and dairy workers’ pay slumped 16% to $434 million in the three months through September.