A barometer of manufacturing is still solidly in the expansion zone, though back from the very strong levels recorded in February.

The BNZ-Business New Zealand performance of manufacturing index (PMI) for March held on to half of the outsize gains it made in the previous survey.

At 54.5 the PMI is above its long-run average of 52.5. Any level above 50 indicates expansion.

"Although it didn't quite live up to February's humdinger, it represents positive momentum," BNZ economist Doug Steel said.


"Production and new orders were again the strongest sub-indices.

"But just like the headline result, they did not quite live up to the stellar February readings."

Indicative of the developing positive trend is that on a three-month moving average basis the PMI is at its highest level since June 2010, Steel said.

By contrast manufacturers' responses to the New Zealand Institute of Economic Research's quarterly survey of business opinion, released on Wednesday, painted a less buoyant picture.

A net 3 per cent of manufacturers reported higher output over the past three months, which was marginally better than in the two previous surveys. The higher output was despite a net 25 per cent reporting falling New Zealand deliveries, while exports were in line with the long-term trend.

"Subdued new orders and sharply rising inventories suggest future activity will slow," NZIER's principal economist Shamubeel Eaqub said.

Manufacturers' expectations for output, exports, profitability and hiring in recent QSBOs have been more optimistic that what they subsequently report happened.

Labour's economic development spokesman David Cunliffe said the QSBO underscored how halting the recovery seemed to be.

"There is a worrying absence of business investment. Investment intentions are down, in line with capacity pressures.

"This is hardly surprising with an exchange rate that is consistently overvalued and the lack of a credible government economic growth plan," he said.

"At the same time there are predictable but mounting labour and housing shortages in Canterbury, which alongside the standoff between EQC and insurers, is hugely debilitating for the earthquake rebuild."

* 54.5 performance of manufacturing index for March
* 57.7 performance of manufacturing index for February
* 52.5 long-term average
Any level above 50 indicates expansion