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New Zealand’s Manufacturing Sector Continues Growth Streak

A steel manufacturing plantNew Zealand’s manufacturing sector has been on a growth trend since October 2012 up to October 2017, according to the Performance of Manufacturing Index (PMI).

The PMI showed that manufacturing sector’s expansion registered at a 57.2 reading in October this year. While this is lower than the 57.6 reading in September, it still reached a higher number than 50 that indicated growth.

Manufacturing Output

BNZ Senior Economist Craig Ebert said that the reading in October represented good news for the industry, as it suggested further business. From manufacturing processes such as shot peenings to new factory orders, the PMI results focused on the “nuts and bolts of activity” instead of market sentiment or outlook.

Strong increases in production and new orders propelled the expansion in October. In some areas such as Otago and Southland, manufacturing optimism reached an almost two-year high after the region recorded a 69.5 reading, up from 61.7.

Regional Optimism

The recent increase in Otago and Southland’s manufacturing index represented the biggest jump over the last 23 months. Virginia Nicholls, CEO of Otago Southland Employers’ Association, said that food manufacturing, construction activity and aluminium boat production comprised the growth drivers.

Food and beverage manufacturers have been preoccupied with contingency plans for stocking products, ahead of the holiday season in 2017.

Suppliers in the construction industry also rush to complete orders and jobs before the holidays, while aluminium boat builders recorded solid growth in domestic sales heading into summer, Nicholls said.

Also, the increased level of activity in these regions suggested that the industry showed no concern on a recent change in the country’s government, according to Ebert.

Conclusion

The increase in manufacturing activity not only benefits the economy but also stimulates employment, as more companies will likely hire additional workers to meet the demands of an expanding industry.

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