New Zealand manufacturing sales volumes rose in the fourth quarter last year, driven by dairy and meat and adding to evidence of strong, export-led demand for the nation's soft commodities.
Sales volumes climbed 5.7 per cent, seasonally adjusted, the biggest gain since the first quarter of 1995 when petroleum and coal manufacturing was added to the series, according to Statistics New Zealand. Excluding dairy and meat, sales rose 0.9 per cent.
Meat and dairy manufacturing volumes rose 15 per cent in the fourth quarter, the biggest increase since March 2009. That comes after government figures last week showed New Zealand's terms of trade rose to a 40-year high in the fourth quarter, edging closer to an all-time high reached in the June quarter of 1973. The nation recorded a record trade surplus for January, driven by sales of dairy products to China.
"This story was already flagged in the overseas trade figures," said Michael Gordon, senior economist at Westpac Bank. "Dairy production had recovered to pre-drought levels by the September quarter, but wasn't shipped overseas until the December quarter."
He said the manufacturing figures were consistent with Westpac's forecast for gross domestic product to have risen 0.9 per cent in the fourth quarter.
The value of manufacturing sales rose 6.3 per cent in the fourth quarter, or 1.1 per cent once dairy and meat were stripped out. The value of dairy and meat sales rose 18 per cent.
Among other contributors to the rise in volumes, transport equipment and machinery and equipment manufacturing rose 5.9 per cent. Fruit, oil, cereal and other food manufacturing rose 5 per cent.
These were also the biggest contributors to the gain in the value of sales after dairy and meat. Transport equipment and machinery and equipment manufacturing rose 4.5 per cent by value and fruit, oil, cereal and other food manufacturing rose 5 per cent.