Manufacturing activity shrinks in north region

Manufacturing activity dropped significantly in the northern region last month although it steadied across most of the country.

The northern region, which includes Auckland, recorded a fall on the Business New Zealand performance index for April.

The northern region's seasonally adjusted index came in at 46.9 for April - down from 53.8 in March.

A reading above 50 on the index indicates that the sector is expanding while a reading under 50 indicates contraction.

Business New Zealand chief executive Phil O'Reilly said it was possible that Auckland was the first to feel the rising costs associated with the fall in the dollar.

But he warned that it was important not to put too much emphasis on change over one month.

The result for the country as a whole was steady with a figure of 53.1, roughly in line with the March result, a continuation of the positive trend that had been evident for most of the year so far.

The index went back into the black in February but before that recorded five straight months of contraction. The latest nationwide figure was still up on the 52.4 recorded in April 2005.

Comments made by manufacturers as part of the survey were generally more negative than positive. The fall of the kiwi dollar had impacted on costs and 58 per cent made negative comments compared with 42 per cent positive.

The dollar had divided the outlook of manufacturers. Those with an export focus had more overseas orders while those with a domestic focus were reporting rising costs for imported materials. Domestic orders for some firms were also low - reflecting low levels of consumer confidence.