New Zealand manufacturing sales volumes were boosted by chemical and plastics makers and transport equipment producers in the September quarter, a period when leading indicators showed manufacturers remained optimistic in the run-up to the general election.

The volume of all manufacturing sales rose a seasonally adjusted 0.3 per cent in the three months ended September 30, while the value increased 0.5 per cent, Statistics New Zealand said.

Chemical, polymer and rubber product led gains, as manufacturing sales volumes rose 3.7 per cent in the quarter while values advanced 2.6 per cent. That was followed by transport equipment, machinery and equipment manufacturing sales volumes increasing 2.8 per cent and values gaining 2.5 per cent.

"Over recent years, the underlying supports for core-manufacturing growth have been construction activity and investment demand. Construction performed well in Q3, after a soft performance over the first half of the year," ASB Bank economists said in a note.


"Further, a strong in lift in transport, machinery and equipment sales (up 7.4 per cent over the past year) indicates strong underlying demand for investment."

The data is the final component before the release of third-quarter gross domestic product figures on December 21.

ASB raised its preliminary forecast for GDP to expand 0.5 per cent for the quarter from a previous projection of 0.4 per cent, saying today's data indicated a "very strong" reading on manufacturing excluding the primary sector.

The Stats NZ survey showed meat and dairy product manufacturing, which accounts for almost a quarter of production, reported a 0.5 per cent decline in sales volumes in the quarter, while sales values fell 0.3 per cent. On an unadjusted basis, sales volumes shrank 4.6 per cent from the same quarter a year earlier, while values jumped 20 per cent.

ASB said the decline in meat and dairy suggested a run down in stocks during the quarter as livestock slaughter and dairy production fell during the period. Meat and dairy production closing stocks of finished goods were 16 per cent below the same period a year earlier.

"While dairy had looked to recover in recent months, recent dry weather casts some doubt over further dairy production growth for the rest of the season," the economists said.

Total sales volumes were flat from a year earlier, while values jumped 8.6 per cent to $25.25 billion from September 2016, bolstered by the recovery in dairy prices and increased meat prices. Inventories shrank 6.3 per cent from September 2016.

The Bank of New Zealand-Business NZ performance of manufacturing index showed the sector was in relatively good heart during those months in the lead-up to the election, and has been in a state of expansion since October 2012.


Since then, the October PMI showed activity shrank that month while remaining at a "solidly expansive level", although the latest business confidence survey has shown growing pessimism in the private sector about the economy's health.