August saw a mix of results that kept manufacturing in expansionary mode, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for August was 52.9 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). Although this was down slightly on the July result of 53.2, almost all results since November 2010 have been above 50.0 and within a relatively narrow band between 52.7 and 54.7.
BusinessNZ’s Executive Director for manufacturing Catherine Beard said that the negatives for August were equally matched by positives elsewhere.
“Over the last four months we’ve experienced the steadiest period of activity since the survey began in 2002,” she said.
“Looking at the current month, while elements of the manufacturing sector, such as those by region and sub-industry fared worse in August, this was counteracted by pick-ups elsewhere, notably the Otago-Southland region and the metal product manufacturing sector.”
BNZ economist Doug Steel said that it is important to look at all information in assessing economic performance. As ever, it pays not to read too much into any one number. While this is true at the best of times, it is especially important now with so many moving parts.
“August’s PMI continues a remarkably steady run over recent months, but masks considerable and widening variation in the detail. While this variation reflects the many factors pushing and pulling the economy, it is encouraging to see the overall trend remain positive,” Doug Steel said.
Despite the dip in expansion, four of the five seasonally adjusted main diffusion indices were still in expansion during August. Deliveries (55.8) led the way with a result similar to June 2011, followed by new orders (54.3). Encouragingly, production (53.7) increased 1.2 points from July 2011, while finished stocks (52.3) also displayed a rise. Employment (49.2) was the only main sub-index to fall below 50, with its lowest result since December 2009 (49.1).
Unadjusted results by region showed the South Island in better heart during August. The Otago/Southland region (61.8) led the way with its first expansionary result since January this year, and also led the way for all regions in August. The Canterbury/Westland region (57.2) built on its solid result in July, with three of the last four months showing expansion levels over 56. The Northern region (51.5) continued to slip with its lowest result since January 2011, while the Central region (49.9) also fell to a level of almost no change for August.
Click here to view the August PMI.
Click here to view seasonally adjusted & unadjusted time series