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Manufacturing activity eases in November

NZN 14/12/2016 Sophie Boot

New Zealand manufacturing activity softened for the second month in a row in November while still holding above its long-term average.

The Bank of New Zealand-BusinessNZ performance of manufacturing index declined to a seasonally adjusted 54.4 in November from 55.1 in October.

A reading of 50 separates expansion from contraction, with the long-term average at 53.2.

Three of the five sub-indices dropped.

New Zealand's manufacturing sector had almost been in continuous expansion since October 2012, barring a blip in January last year it slipped into contraction .

The economy has been buoyed by a construction boom that started in the post-earthquakes Christchurch rebuild and has extended to Auckland's housing market.

In the latest monthly data, employment was the worst performing sub-index, down 5.1 points to 48.6.

The employment index drop was rogue, Bank of New Zealand senior economist Craig Ebert said in his report.

"We don't see signs elsewhere that manufactures are cutting jobs - quite the opposite," Mr Ebert said. "The other weak part of the PMI was in stocks of finished product. This does not look to be a sign of caution, not with the PMI new-orders index pumping away at a seasonally adjusted 58."

Construction is still underpinning momentum in New Zealand manufacturing production, with positivity despite November's earthquakes, Mr Ebert said.

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