Manufacturing activity bounced back from April’s dip to show strong expansion for the current month, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for May was 55.7 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This is 7.5 points up from April and is the highest level of activity since February 2012. For the first five months of 2012 the PMI has averaged 53.3, compared with 52.5 for the corresponding time period in 2011.
BusinessNZ’s executive director for manufacturing Catherine Beard said the improvement in manufacturing activity was built on some crucial upswings from the previous month.
“The key sub-indices of production and new orders showed a significant upswing from April, while the Northern and Canterbury/Westland regions went from decline to expansion in activity. Comments from manufacturers were also more positive, with Australia remaining a sizeable focus for export opportunities. Interestingly, a number of manufacturers could not identify a main positive influence. Instead, it was an overall steady increase in activity from various facets of their business. With four of the last five months in expansion, 2012 is continuing on a better growth path than seen in recent years.
BNZ Economist Doug Steel said, “It is heartening to see a solid PMI result in May. While there are obvious risks from the European situation ahead, recent trends in the PMI suggest the manufacturing sector has made decent positive contributions to overall GDP growth in both Q1 and Q2 of 2012.”
The increase in overall activity meant all five seasonally adjusted main diffusion indices also showed expansion in May. This was led by production (58.8), followed by new orders (57.3), which combined make up the greatest weight of the overall result. Employment (52.2) experienced a small increase in expansion from April, and remains in a tight band of activity that has continued for five months. Deliveries (52.7) bounced back into expansion, while finished stocks (50.5) was close to no change.
Unadjusted results by region showed activity picking up in parts of the country during May. The Northern region (58.8) rebounded strongly from April’s result to its highest value since November 2010. Conversely, the Central region (44.5) dropped to their lowest result since the end of last year. The Canterbury/Westland region (61.3) picked up strongly on the back of strong sales and business building better momentum. The Otago/Southland region (50.0) recovered to the no change mark after three months in decline.
Click here to view the May PMI.
Click here to view seasonally adjusted & unadjusted time series