PMI eases but orders strong
MANUFACTURING in Otago and Southland during November eased back from October, but key indicators such as new orders and deliveries of raw materials remained strong and in expansion.
In the South, lack of staff continued to plague employers, further compounded by rising costs such as transport, wages and fuel.
In October, the BNZBusinessNZ performance of manufacturing index showed Otago easing back from 60.3 points the month before to 59.4, while data released yesterday showed further easing to 52.7 points for November.
Points above 50 are expansion, and below, contraction.
Nationally, the barometer points were unchanged at 53.5.
Otago Southland Employers Association chief executive Virginia Nicholls said Otago and Southland’s overall activity at 52.7 points was similar to the 2018 average of 53 points.
‘‘In the regional breakdown in categories, the good news is that new orders are in expansion at 56.3, and deliveries of raw materials are 59.4.’’
From second place of four regions across the country in October, Otago Southland fell to third place, slightly ahead of Canterbury West Coast but well off the pace of upper North Island’s 65.1 score and lower North Island’s 63.4 points.
BusinessNZ executive director for manufacturing Catherine Beard said it was pleasing to see November’s activity close to the October result.
‘‘With two of the three months for the last quarter of 2018 producing results around the longterm average, this bodes well for the year to end on more of a positive note after lacklustre results during the middle of 2018,’’ she said in a statement.
In the South, the construction industry had continued to experience strong demand in November. Mrs Nicholls said there were good sales in metalproduct manufacturing for the local and export markets, but reiterated exporter concerns over the outcome of Brexit negotiations.
She said stocks of finished products and production levels in the South were unchanged for the month, but employment levels had dropped to 46.9 points.
‘‘Finding staff with suitable skill levels is limiting the growth of some businesses.
‘‘Recruiting staff in rural areas is also challenging,’’ she said.
Employers were addressing the skill shortage in several ways, including upskilling their existing staff and employing people with basic skills, then training them to meet future needs, she said.
Mrs Nicholls said several business costs were rising, including transport and wages, and petrol costs were high.
‘‘Many businesses are not able to raise prices to cover these costs,’’ she said.
The proportion of positive comments for the South was still sitting at 63%.
However, Mrs Nicholls said southern businesses were still concerned about recent changes to employment relations law that would come into effect on May 6.
‘‘At this time, the 90day trial periods have been removed for all but small businesses with fewer than 20 employees,’’ she said.