Manufacturing output holds steady in June

Photo / NZ Herald

The manufacturing sector was in neutral last month, the BNZ-Business New Zealand performance of manufacturing index pointing to neither expansion nor contraction.

At 50.2 the index was down 5.6 per cent from May. While the PMI has sawtoothed from month to month, BNZ economist Doug Steel said the trend remained positive, "though not strong by any stretch".

Its average level in the June quarter, 51.2, was in expansion territory but less firm than the previous quarter's average 54.2, suggesting manufacturing output would not repeat the hefty 1.8 per cent rise recorded in the March quarter's gross domestic product data.

Three of the PMI's sub-indices were pointing to expansion last month - new orders, production and finished stocks - while employment contracted and deliveries were at their lowest since October.

Steel said metal product manufacturers and non-metallic mineral manufacturers stood out on the strong side.

Overall, respondents' comments were nearly evenly split, at 51 per cent positive and 49 per cent negative.

The survey found a particularly large drop, and to a low level, in the PMI for large firms, defined as those with more than 100 employees, Steel said.

That might reflect weaker export markets, as larger firms were more likely to be exposed to those markets and the New Zealand dollar had bounced over the past month, he said.

On the other hand, in Tuesday's quarterly survey of business opinion manufacturers reported higher export sales in the past three months and expected higher exports in the coming three months.