New Zealand's manufacturing sector experienced a decline in overall activity last month - the first fall in more than two years.
The BNZ-Business NZ Performance of Manufacturing Index showed the seasonally adjusted result for March stood at 48.3 - 3.5 points lower than the February result.
This marksthe first time the seasonally adjusted PMI has been in decline since January 2006, and is the lowest result since November 2005. It is also well below the average PMI value of 54.4 since the survey began in 2002.
A PMI reading above 50 indicates that manufacturing is generally expanding; below 50 it is declining.
Business NZ chief executive Phil O'Reilly said the result highlighted a lacklustre first quarter of activity for the manufacturing sector.
"Results for the first quarter of 2008 have averaged out to 51.0, which is the lowest score for the start of any year of the survey."
Comments from respondents are symptomatic of a lack of confidence in the market, with individuals indicating a fall-off in activity from domestic and overseas customers.
"Looking out towards business possibilities for New Zealand manufacturers during the rest of 2008, it will be important they start engaging in potential markets in China ... as tariffs reduce further in the near future."
BNZ senior market economist Craig Ebert said much of the concern relates to obvious factors, including the ongoing strength in the NZ dollar, cost pressure, resource constraints and, now, weakening domestic demand. "But there is another factor well worth noting - offshore demand. It is slowing already, and will probably continue to do so for the foreseeable future."
