January jitters
The manufacturing sector experienced a drop in the rate of expansion for the first month of 2015, according to the
latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for January was 50.9 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This
was 6.2 points lower than the previous month, and the lowest overall result since December 2012.
BusinessNZ’s executive director for manufacturing Catherine Beard said that while the start to 2015 was not ideal, the
result was not a complete surprise.
“With firms partly closed during January, the unadjusted values across the country displayed a fairly similar pattern to
most years the survey has been running. However, the difference compared with the last two years was that the unadjusted
January result in 2015 was lower.
“Overall though, the PMI remains in expansion, and we will see in the months ahead whether the sector can get back on
track to expansion levels seen during 2013 and 2014.”
BNZ Senior Economist, Doug Steel, says “January’s soft PMI results jar, especially against a backdrop of generally
positive economic indicators. We wouldn’t leap to conclusions on one (holiday-affected) month’s data, but it does
question the strength of economic growth early in 2015.”
Although most seasonally adjusted main diffusion indices were in expansion, one of the key indices recorded decline, as
Production (47.5) experienced its first contraction in activity since August 2012. In addition, New Orders (50.1) fell
to its lowest result since December 2012. The fall in production and slower expansion in new orders may have contributed
to Finished Stocks (56.1) recording its highest result since September 2014, while Deliveries (53.4) experienced its
lowest value since May 2014. Employment (51.0) went back into slight expansion during January.
All four regions were in contraction during January, with similar results across the country. In the North Island, the
Northern region (45.5) fell back to its lowest value since August 2012, while the Central region (47.5) experienced its
second consecutive contraction. In the South Island, the Canterbury/Westland region (48.3) fell into contraction for the
first time since December 2013, while the Otago-Southland region (46.6) fell back to levels of activity similar to
mid-2014.
ends