The New Zealand Manufacturers and Exporters Association Survey of Business Conditions indicate that domestic manufacturing sales decreased by less than half a percent in December 2011 compared to December 2010, while manufacturing export sales increased by 15.4%. Overall, total sales increased by 5.3% year-on-year, and net confidence among the businesses surveyed was stable.
Markets and production capacity remain the key constraints named by manufacturers, and NZMEA Chief Executive John Walley states that market concerns have grown for our manufacturing exporters over the last four months. This concern is unsurprising given the current issues in Europe and the exchange rate. To quote a BERL associate, Dennis Rose, “our current monetary/exchange rate policies are associated with a tendency to over-valuation and high exchange rate variability.” This policy environment is not likely to appease these concerns anytime soon.
The BNZ-Business NZ seasonally adjusted PMI stood at 50.5 in January, indicating that manufacturing activity has eased its way into 2012. Three of the five main indices that make up the PMI were above 50 in January, with the highest being production sitting at 51.7. In regards to three-monthly averages, the PMI stood at 50.7 in the three months to January, and employment and new orders were also sitting above 50.
As shown in the figure, the three-monthly average for the PMI has generally sat above 50, indicating an expansion in activity. More positively, the three-monthly average for employment has also been above the bar. In January 2012 this indices sat at 52.5, a good result but slightly below the three monthly average seen in January 2011 of 52.8.
The agreement of the second round of bailout packages for Greece, and Europe’s ongoing debt crisis, continues to impact on the international manufacturing surveys we monitor. JPMorgan Global Manufacturing & Services PMI sat at 51.2 in January 2012, a slight increase from the 50.5 seen in December 2011. Production was recording as growing in the United States, Japan and Germany due to modest growth in new export orders. The US and Germany also reported job growth in their manufacturing sectors.