Imports make life tougher for NZ manufacturers

A drop in manufacturing in the northern region dragged a key measure of the sector's health back into the red in July after a brief respite during the Lions tour.

The north was the only area in the country showing a fall in activity for the month.

The ANZ-Business NZ Performance of Manufacturing Index (PMI) was 48.2 points in July, falling for the third month out of the past four.

A PMI reading above 50 points shows manufacturing is expanding; less than 50 points shows it is contracting.

"The July result continued the general trend of declines in activity over recent months, symptomatic of an overall decline in the economy," Business NZ analyst Stephen Summers said.

"Many manufacturers are in the midst of a seasonal slowdown, with a drop-off in orders both from domestic and overseas customers."

Competition from imports had increased.

The PMI had picked up to 52.2 in June - after two months of decline - when thousands of tourists from the British Isles were following the Lions.

The July contraction was centred on the northern region, which recorded an index value of 44.8 points - the lowest value the region has experienced since the survey began in August 2002.

The Canterbury/Westland region (at 54.6 points) experienced moderate expansion, and Otago/Southland and Central regions (at 50.7 points and 50.6 points respectively) were close to no change.

The PMI was at its lowest July figure for three years.

Overall, most industry groups showed decline, although the petroleum, coal, chemical and associate product sector, at 51 points, showed slight expansion.

The machinery and equipment sector, at 49.3 points, was close to no change while other industries experienced values around 47 points - indicating contraction.

- NZPA