More of the same in manufacturing

Friday December 21, 2012 Fiona Stokes


The annual average percentage change in manufacturing sales volumes recorded small but positive growth in the September 2012 quarter.  This was due to an increase in the sales volumes of dairy and meat products, chemicals and non-metallic mineral products.  However, if we exclude dairy and meat, annual manufacturing sales volumes were down by 0.04 percent.  This indicates no improvement between the September 2012 quarter and that of September 2011.  This decline can be seen in the trend line in the figure below.



Turning to the surveys that we monitor, the BNZ-Business NZ seasonally adjusted Performance of Manufacturing Indicator (PMI) stood at 48.5 in November, indicating that manufacturing activity is contracting.  A PMI reading above 50 indicates the manufacturing sector is expanding.


This is a decline on the PMI recordings in October (50.3), but similar to that seen in September (48.5) and August (47.5).  Equally, this result is similar to that seen in November 2011 (46.4) but below that seen in November 2010 (53.9) and November 2009 (52.5).


Two of the five indicators that make up the PMI were above 50 in November, with the highest being finished stocks sitting at 53.4, followed by deliveries at 51.8.  In regards to three-monthly averages, the PMI stood at 53.2 in the three months to November, with production, employment and new orders all sitting above 50 during this time. 



The other survey that we monitor is the New Zealand Manufacturers and Exporters Association Survey of Business Conditions.  This survey indicates that domestic manufacturing sales increased 11 percent in October 2012 compared to October 2011, while manufacturing export sales increased by only 1.9 percent.  Overall, total sales increased in October 2012 by 7.05 percent year-on-year.  While this is an overall positive result, this optimism needs to be tempered by the realisation that these increases are coming off a low-base, and markets and production capacity are still being reported as constraints.