PMI - still contracting

Manufacturing activity was still contracting during March, according to the BNZ Capital - Business NZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for March was 40.7.

A PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is contracting.

PMI values for March in the years 2003-2008 ranged from 47.2 and 58.6, with an average score for the previous March results of 53.2.

Business NZ Chief Executive Phil O’Reilly said recovery in the sector seemed some distance away.

“The first quarter of 2009 has shown to be considerably worse than previous years, and further months of contraction are expected given comments received from respondents.”

Bank of New Zealand Senior Markets Economist Craig Ebert said the sector was in clear distress, with the PMI jobs indicator at an all-time low of 38.7.

Unadjusted activity for March showed some improvement for some parts of the country. In the North Island, the Northern region (41.3) recorded its highest result since November 2008, although still in contraction for the fifteenth consecutive month. The Central region (45.2) also experienced a lift compared with February. In the South Island, the Canterbury/Westland region (41.0) remained largely unchanged from February, while the Otago/Southland region (37.6) continued to slip further to its lowest result on record.

Almost all manufacturing industry sub-groups again displayed contraction during March, although most showed some improvement from February. The machinery & equipment manufacturing (39.3), metal product manufacturing (40.0) and petroleum, coal, chemical & associated products (41.3) sectors experienced the lowest results for the current month. In contrast, the food, beverage & tobacco sector (50.0) again did not show contraction, but for the first time since August 2008 did not show expansion either.