New order momentum

Continued momentum for new orders in the manufacturing sector contributed to a lift in the sector’s expansion rate, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for April was 54.5 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).  Since the start of the year, activity in the sector has been both healthy and consistent, averaging 54.8 over the four months.  Compared with previous April results, the 2013 value was 7.4 points higher than 2012.

BusinessNZ’s executive director for manufacturing Catherine Beard said that 2013 continues to head in the right direction for manufacturers.

“Results over the last four months provide a regular pattern of growth, which has been assisted by strong activity for new orders, both domestic and offshore.

“Another aspect that needs to be examined is the increasing disparity of activity between New Zealand and the Australian manufacturing sector.  In comparison, the Australian PMI for April was 36.7, their lowest result since May 2009.  In fact the 2013 year provides the two largest monthly differences in activity levels between the two countries since the New Zealand PMI began in 2002.   

BNZ Senior Economist, Craig Ebert, said, “Perhaps the biggest positive in the latest PMI came from the fact new orders, way up at 59.4, met with dipping stocks (47.8). This strongly suggests production will not only keep ramping up, but needs to in order to avoid emptying the shelves”.

Despite the continued healthy national result, only three of the five seasonally adjusted main diffusion indices were in expansion for April.  New orders (59.4) again led the way with its highest result since February 2012.  This was followed by deliveries (55.7), which has now experienced seven consecutive months in expansion.  Production (55.3) increased 2.3 points from March, while both employment (48.0) and finished stocks (47.8) were in decline.

Expansion was experienced in most parts of the country in April.  Both the Canterbury (56.6) and Central (56.3) regions experienced similar levels of expansion for the current month.  The Northern region (52.6) increased 1.9 points from March, while the Otago/Southland region (46.9) remained all but unchanged from March, signalling two consecutive months of decline in activity.

Click here to view the April PMI.
Click here to view seasonally adjusted & unadjusted time series data