Manufacturing hits the New Year with a thud

Media release

16 February 2006

Manufacturing hits the New Year with a thud

Manufacturing activity in January dipped further than in the month before, according to the Business NZ Performance of Manufacturing Index (PMI).

December’s PMI, at 47.6, was the lowest since the surveys began in August 2002.
January’s PMI came in even lower, at 44.1.

A PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining.

PMI values for January in 2003, 2004 and 2005 ranged between 51.4 and 52.6.

Activity by region during January produced record lows in most areas. The Northern region (42.3) fared the worst, recording its lowest ever result for a January month, closely followed by the Otago/Southland region (42.8). The Central region (44.8) also showed a strong fall. The Canterbury/Westland region (49.4) result was close to no change.

All five sub-indexes recorded their lowest ever values: production (42.5), deliveries (43.3), employment (43.5), new orders (45.7) and finished stocks (45.9).

Although the first few months of the year are typically a quiet period for manufacturers, the level of decline experienced in January 2006 is cause for concern, especially since new orders (a gauge of activity for the months ahead) recorded its lowest ever value. Comments from manufacturers provided an array of largely negative sentiment, with the high New Zealand dollar and lack of orders the key concerns.

ENDS

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