Our biggest trading partner Australia is still growing as an export market, meaning the high kiwi dollar against the US might not be terrible for all exporters.
Manufacturing has expanded in New Zealand for the first time since April last year, according to the latest BNZ Capital - Business NZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for September stood at 51.7, up 2.9 points from August and the first expansionary result since April
2008.
It was also the highest result since February last year.
A PMI reading above 50 indicates that manufacturing is generally expanding; below 50 that it is declining.
Business NZ chief executive Phil O'Reilly said that the first overall record of expansion represented "a long time between drinks" for the sector, and involved a rough ride for many businesses, particularly during the end of 2008/start of 2009.
"One swallow doesn't make a summer. Likewise, one positive result should not mean we anticipate strong upward growth. However, there are definitely enough positive signs to give some indication that activity may at least remain somewhere in expansionary mode leading through to Christmas."
He said the "one possible blight on the horizon" was the exchange rate, with negative comments from manufacturers on this noticeably up from August.
"How far the New Zealand dollar keeps pushing upwards and how many international orders suffer as a consequence will determine the extent future expansion is inhibited."
BNZ Capital economist Mark Walton warned against making generalisations about currency movements, as there were some positives for New Zealand manufacturers.
"We must remember that not all of our exporters are paid in US dollar; and the TWI (trade weighted index) masks the fact that exchange rates have moved in some exporters' favour.
Australia was still growing as New Zealand's biggest export market, and was leading the pack of developed countries out of the recession - with GDP growth that has remained in positive territory throughout.
- NZ HERALD STAFF
