NZ manufacturing volumes drop to lowest level in 10 years

NZ manufacturing volumes drop to lowest level in 10 years

By Jason Krupp

Dec. 8 (BusinessDesk) - New Zealand manufacturing volumes have fallen for the third consecutive quarter, their lowest level in more than 10 years, lead by declines in the paper and chemical sectors.

Seasonally adjusted manufacturing sales fell 1.4% in the three months ended Sept. 30, according to Statistic New Zealand. The value of manufacturing rose 1.3%, led predominantly by increases in dairy and meat prices.

The department said manufacturing volumes have been falling since the September 2007 quarter and in the past three years have declined 12.6%. If meat and dairy are excluded, the volume of manufacturing sales has declined 17% over the same period.

"The weak domestic economy, and also the fact that the Australia economy is in the midst of a mid-cycle soft patch, appears to be weighing on activity," said Philip Borkin, an economist with Goldman Sachs & Partners. "We currently have 0.2% quarter-on-quarter GDP growth penciled in and we feel today’s data is broadly consistent with that."

Volumes declined in nine of the 15 manufacturing industries, with petroleum and industrial chemical manufacturing 8.2% lower, paper and paper product manufacturing down 7.9%, and a 5% fall in wood product manufacturing. Partly offsetting these decreases was an 8.5% increase in transport equipment manufacturing and a 4.1% increase in beverage, malt and tobacco manufacturing.

In terms of value, sales values in the meat and dairy industry rose 3.2% or $203 million, and beverage, malt and tobacco manufacturing rose 5.8% or $59 million. Over the same period overall manufacturing output prices, as measured by the producer price index, rose 2.3%.

Once meant and dairy are stripped out, the value of sales in the quarter fell 0.5%, lead by petroleum and industrial chemical with sales down 9.9% or $74 million.

According to the data released by the department on building work put in place in the September quarter, the value of new factories built in the period doubled to $106 million compared the previous three months.

(BusinessDesk)

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