Manufacturing Activity Again In Decline
ANZ-BUSINESS NZ PMI FOR JULY 2005
The ANZ-Business NZ Performance of Manufacturing Index (ANZ-Business NZ PMI) is a monthly survey of the manufacturing
sector providing an early indicator of activity levels. The ANZBusiness
NZ PMI contains data obtained through Business NZ’s regional organisations:
Employers & Manufacturers Association (Northern), Employers & Manufacturers Association (Central), Canterbury Employers’ Chamber of Commerce and Otago Southland Employers’
Association. When interpreting the data, a PMI reading above 50 points indicates manufacturing is generally expanding;
below 50 indicates it is contracting; the distance from 50 indicates the strength of expansion or contraction.
KEY FINDINGS
The ANZ-Business NZ Performance of Manufacturing Index was 48.2 for July, indicating a decline for the third time in
four months. The July 2005 result was also lower than the two expansion values recorded for July 2003 (51.6) and 2004
(57.5).
The level of decline was centered on the Northern region (44.8), the only region recording a fall in activity. This was
the lowest value the region has experienced since the survey began. The Canterbury/Westland region (54.6) experienced
moderate expansion, while the Otago/Southland (50.7) and Central (50.6) regions were close to no change.
Finished stocks (50.2) again experienced the highest sub-index value. All other sub-indexes were in decline, with
production (45.6) experiencing its lowest ever result. The remaining sub-indexes ranged in value between 48.6 and 49.4.
Overall, most industry groups showed decline in July, although the petroleum, coal, chemical & associated product sector (51.0) showed slight expansion. The machinery & equipment sector (49.3) was close to no change, while other industries experienced values around 47.
By size, the only firms experiencing expansion in July were large ones (101+ workers) (52.5). The remaining groups
recorded very similar levels of decline, with medium-large firms (51- 100 workers) (47.3) showing the lowest level of
activity for the month.
The July result continued the general trend of declines in activity over recent months, symptomatic of an overall
decline in the economy. Many manufacturers are in the midst of a seasonal slowdown, with a drop off in orders both from
domestic and overseas customers. Manufacturers have also noted increased competition from imported goods.
PRODUCTION
The ANZ-Business NZ production diffusion index stood at 45.6 – the lowest ever value for this sub-index. The result was
substantially below the July 2003 (49.2) and 2004 (59.3) figures.
The petroleum, coal, chemical & associated product sector (46.5) and the metal product sector (46.1) sectors faired better than other industries in
terms of the level of decline. Four other industries recorded values around 45.
The Canterbury/Westland region (59.1) displayed a strong level of expansion for July, while the Otago/Southland region
(50.0) indicated no change. Both North Island regions were in decline, as the Northern region (41.3) experienced its
lowest ever level of production.
EMPLOYMENT
The ANZ-Business NZ employment diffusion index (48.8) went back into decline after a slight recovery from its lowest
ever value in May. The July value for 2005 was lower than both 2003 (51.5) and 2004 (52.1).
Most industries experienced a decline in activity during July, although the machinery & equipment manufacturing sector (60.2) displayed strong expansion, followed by the petroleum, coal, chemical & associated product sector (53.5).
All regions except the Central region (54.7) recorded a decline in employment activity for July. The lowest value was
recorded by the Northern region (46.5), followed by the Canterbury/Westland region (47.0).
NEW ORDERS
The ANZ-Business NZ new orders diffusion index for July (48.6) recorded a decline after two months of slight expansion
in May and June. It was also the second consecutive time it recorded the lowest monthly value compared with the other
sub-indexes. A low new orders value generally means a corresponding drop in production for the future.
Results across industry groups were generally mixed. While the metal product sector (52.0) showed an expansion in
activity, the wood & paper product sector (40.5) showed a very low level of activity.
Both South Island regions experienced an increase in new orders during July. In contrast, the two North Island regions
recorded moderate declines.
FINISHED STOCKS
The ANZ-Business NZ finished stocks (50.2) sub-index again recorded the highest sub-index value in July. However, the
2005 value was lower than both 2003 (54.9) and 2004 (55.8).
The wood & paper product (73.8) sector again recorded the highest level of expansion, while the food, beverage & tobacco (50.0) sector recorded no change.
The Central region (57.0) recorded the only expansion in finished stocks for July, while finished stocks showed a
strong decline in the Otago/Southland region (39.6).
DELIVERIES
The ANZ-Business NZ deliveries of raw materials diffusion index stood at 49.4 in July.
While the petroleum, coal, chemical & associated product (53.5) and wood & paper product (52.4) sectors showed some expansion, other industries showed no change or decline.
All regions except the Northern region (41.3) recorded an expansion in deliveries. The highest level of expansion was
recorded in the Canterbury/Westland region (60.6).
National Indexes
July 2003 / July 2004 / June 2005 / July 2005
ANZ-Business NZ PMI 51.6 57.5 52.2 48.2
- Production 49.2 59.3 51.5 45.6
- Employment 51.5 52.1 51.9 48.8
- New orders 52.3 61.6 50.9 48.6
- Finished stocks 54.9 55.8 55.8 50.2
- Deliveries 52.1 54.5 53.9 49.4
Regional Indexes*
July 2003 / July 2004 / June 2005 / July 2005
ANZ-Business NZ PMI 51.6 57.5 52.2 48.2
- Northern 51.5 60.6 50.5 44.8
- Central 51.5 55.2 53.0 50.6
- Canterbury / Westland 49.5 60.9 54.4 54.6
- Otago/Southland 55.0 45.8 54.7 50.7
*Regions (grouped according to Business NZ’s associated regional organisations) Northern (Employers and Manufacturers
Association (Northern)): Northland, Auckland, Waikato, Bay of Plenty Central (Employers and Manufacturers Association
(Central)): Gisborne, Hawke’s Bay, Taranaki, Manawatu, Wanganui, Wellington, Nelson, Tasman Canterbury/Westland
(Canterbury Employers Chamber of Commerce): Canterbury, Marlborough, West Coast Otago/Southland (Otago Southland
Employers Association): Otago, Southland
Next ANZ-Business NZ PMI (August results): 16 September 2005
ENDS