Manufacturing sector recovery continues

The manufacturing sector is close to moving into expansion mode, according to the latest survey by BNZ Capital and Business New Zealand.

The seasonally adjusted Performance of Manufacturing Index (PMI) rose to 49.7 in July. This is an increase of 3.2 points from June and is now at its highest level since April 2008.

A PMI below 50 indicates the manufacturing is contracting and a PMI above 50 indicates it is expanding.

BNZ Capital head of research Stephen Toplis said improvements in PMIs were being recorded around the world.

They were a growing confirmation that the worst was over.

Business NZ chief executive Phil O'Reilly said that positive results for key sub indicators provided a strong base for improvement in the sector.

"While the result is very encouraging and almost identical to manufacturing developments offshore, the next significant development for sustained expansion needs to come from improvements in numbers employed in the sector," said O'Reilly.

The production indicator rose to 51 and new orders indicator rose to 55.1. Three of the five sub indicators were still below 50 with employed at 44, deliveries of raw materials at 47.6 and finished stocks at 42.8.

- NZPA