NZ manufacturing activity slows in February as early livestock cull dents meat processing
By Paul McBeth
March 16 (BusinessDesk) - New Zealand's manufacturing activity slowed in February as an early livestock cull last year
weighed on primary production at the start of 2018.
The Business NZ-BNZ performance of manufacturing index fell to a seasonally adjusted 53.4 in February from 54.4 a month
earlier, remaining above the 50 level separating expansion from contraction. Four of the five sub-indices increased,
with just finished stocks falling 1 point to 51.1. Production rose 0.4 of a point to 53.9, employment gained 3.3 points
to 54.8, new orders returned to an expansionary 54.8 from 49.7 and deliveries also crossed back into positive territory
with a reading of 52.7 from 49.8.
"The generally slower PMI suggests we shouldn't expect Q1 manufacturing GDP to be much different from the flat result
recorded in yesterday's official figures for Q4," Bank of New Zealand economist Doug Steel said in a note. "Early
livestock culling on account of adverse weather seemed to boost Q4 manufacturing activity but will have the opposite
effect through early 2018 given New Year rains."
Government data out yesterday showed New Zealand's manufacturing production shrank 0.1 percent in the December quarter
following a 0.7 percent expansion in September, with the wet spring followed immediately be a drought weighing on the
agricultural sector and sapping food processing.
Steel said the livestock cull is also showing signs of seeping into this year's production with lamb processing down
about 3 percent from a year earlier and the cattle cull 17 percent lower than in 2017.
"It all suggests primary processing will be a drag on manufacturing activity early in 2018," he said.
Business NZ manufacturing executive director Catherine Beard said the pace of expansion had levelled off in recent
months, and while the number of positive comments from respondents outweighed negative at 51.4 percent, a number "noted
the sluggish start to the year with a dip in new orders being a common message."
(BusinessDesk)
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