New Zealand's manufacturing activity shrank for a fourth month in September, as new orders fell to the lowest level since May 2009.
The BNZ-BusinessNZ performance of manufacturing index (PMI) rose to 48.2 last month from 47.2 in August, indicating the pace of contraction is slowing. A level of 50 marks the difference between contraction and expansion. Four of the five seasonally adjusted diffusion indexes were in contraction in September.
New orders slipped 2 points to 45.9. Employment edged up 3.7 points to 49.2 alongside production and deliveries though all three remained in contraction. Finished stocks bucked the trend on 50.6, its first expansion since May 2012.
"Talk that the industry is in crisis is overblown," said Craig Ebert, senior economist at BNZ. "Manufacturers' expectations for output over the next three months remain positive."
Tuesday's quarterly New Zealand Institute of Economic Research business survey showed manufacturers held a "fairly solid" view of their business over the next 12 months. Manufacturers' expectations for output over the next three months rose to 17 points from 9 points.
The NZIER sees the pace of annual growth slowing to 1.5 per cent in the second half of the year from a pace of 2.6 per cent at the end of June, based on a more pessimistic outlook in the September survey of business opinion.
Today's unadjusted results showed three of the four regions were in contraction last month. The Central Region led the way for the third consecutive month up 0.4 points to 53.1 in September. Northland and Canterbury/Westland improved but remained in contraction, while Otago-Southland slipped back to 48.8.
Globally, the JPMorgan Global Manufacturing PMI stood at 48.9 in September up from August's 28 month low of 41.8 points.
The Bank of New Zealand-Business NZ sister survey the performance of service index will be released on Monday.