Firm grip on expansion

New Zealand’s manufacturing sector remained in a firm grip of expansion as activity in the sector rose during November, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for November was 56.7 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).  The sector has now been in expansion for 14 consecutive months, with an average PMI value of 56.0 since the start of 2013.

BusinessNZ’s executive director for manufacturing Catherine Beard said that there are various elements of the November result that shine a positive light on the sector.

“While all the manufacturing sub-sectors were in expansion, key sectors such as metal product manufacturing are showing stellar levels of activity, no doubt partly due to the boom in construction at present.  In addition, new orders and production remain key components towards ongoing expansion in the sector, while employment levels are showing more consistent and steady growth.

“Obviously, there are some seasonal factors at play with Xmas fast approaching.  However, respondents have noted the stronger pre-Xmas rush compared with previous years.  This bodes well for a convincing end to 2013.”

BNZ senior economist, Craig Ebert, noted the combination of high orders and lean inventory, suggesting manufacturing production will continue to post a strong expansion, following great gains over recent months.

“The PMI keeps on keeping on, with expansion in every sector and every region – the days of it just being Canterbury are long gone. Employment and production are picking up pace, and even more encouraging is the new orders index racing ahead at 62.0.”

All five seasonally adjusted main diffusion indices were again in expansion for November, again led by new orders (62.0) which recorded consecutive post-60 point values.  Production (59.4) increased 2.0 points to record its highest level of activity since July, while deliveries of raw materials (56.7) did likewise.  Employment (53.3) experienced further increases in activity, while finished stocks (50.2) experienced a decrease, although remained in slight expansion.

Expansion was across the entire country during November, and the first time since November 2010 that all areas displayed post-60 levels of expansion.  In the North Island, the Northern region (62.2) recorded its highest level of activity since November 2009.  The Central region (64.6) rose 11.0 points from October, and the highest level of activity in that region since November 2002. In the South Island, the Canterbury/Westland region (62.0) continued its onwards momentum, while the Otago-Southland region (65.7) also built on its October result to show a similar result around the same time last year.

Click here to view the November PMI
Click here to view seasonally adjusted & unadjusted time series data
Click here to view the One-Year Release Date Schedule for the PMI and PSI December 2013 – December 2014