Activity in New Zealand’s manufacturing sector saw December expansion at the same level as November, according to the BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for December was 54.5 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was the same as November, and the joint lowest expansion level since October 2015. Overall, the sector remains solidly in expansion in almost all months since October 2012.
BusinessNZ’s executive director for manufacturing Catherine Beard said that although December’s result did not show improvement from November, the overall result for 2016 was encouraging.
“Activity in the manufacturing sector over 2016 averaged out at 56.0. This was up from 54.2 in 2015, but interestingly the same result as both 2014 and 2013. Overall, this shows how consistent and positive activity has been for the sector over the last few years”.
“In addition, the proportion of positive comments stood at 70% for December, with seasonal factors (particularly Xmas) having a strong influence”.
BNZ Senior Economist, Craig Ebert, said “the December result caps off a positive year for the manufacturing sector. Indeed, since the survey started in 2002, last year’s average has only been surpassed by 2004’s 57.5”.
Manufacturing Snapshot
Happy Last Year
New Zealand’s Performance of Manufacturing Index (PMI) finished 2016 at 54.5, so no change between November and December. The final two months weren’t quite as strong as the rest of the year (not due to earthquakes, it would seem, as, regionally, Central NZ has shown the largest annual increase).
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Some Warnings
The PMI and QSBO both suggest manufacturers enjoyed reasonable growth, particular in production, in the final quarter of 2016. But some details raise a warning.
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Happy New Year
A reason not to be too alarmed by softer new order indicators is manufacturers’ overall upbeat outlook. Manufacturers in the QSBO are more confident.
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Supply and Demand
Also above norms are indicators of manufacturers’ resource tightness. For example, manufacturers’ difficulty in finding appropriate staff has become even more acute while capacity utilisation, at 92.3%, is above its long term average, of 90.4%.
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