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New Zealand manufacturing activity grew at its strongest pace in 10 months in March as jumps in production and new orders offset the negative impact from a strong local currency, a survey showed today.
The seasonally adjusted Business NZ Performance of Manufacturing Index (PMI) rose to 57.1 last month from an upwardly revised 54 in February, and 52.9 in March last year.
A figure over 50 indicates manufacturing is expanding, while under 50 indicates contraction.
"While the New Zealand dollar is still the hot issue for manufacturers, steady results in overall PMI activity over the last year have been encouraging," Business NZ Chief Executive Phil O'Reilly said in a statement.
Four of the PMI's five sub-indices rose on the previous month, with product and finished stocks showing the strongest gains. Employment was the only measure to decline.
O'Reilly said the strength of the New Zealand dollar was the most-mentioned negative factor facing manufacturers, although labour shortages were also singled out as constraining production.
"On the positive side, some have still managed to increase offshore orders despite a high NZ dollar," O'Reilly said.
The New Zealand dollar hit a 23-month high of $0.7313 on Wednesday, supported by New Zealand's high interest rates, a firmer neighbouring Australian dollar in late February, and overall US dollar weakness.
A rise in the currency makes New Zealand's exports less competitive on world markets, although it also lowers the price of imported raw materials.
- REUTERS
