Manufacturing figures indicate cooling growth

New Zealand’s April manufacturing activity expanded compared to March but was well down on the year as demand growth continues to cool.

The Bank of New Zealand-Business NZ performance of manufacturing index rose 1 point to a seasonally-adjusted 53 in April but was down from a 59 reading in the same month a year earlier. A reading above 50 indicates activity is expanding and the long term average is 53.4.

BusinessNZ’s executive director for manufacturing, Catherine Beard, said that while the improvement in activity for April was welcome, the underlying trend still remains a concern.

“Seasonally-adjusted values over the last six-seven months have remained static between the 52-54 mark range,” said Beard.

“Although this indicates the sector is still in expansion mode, the unadjusted series has tended to trend down since late 2017.

“If this trend continues, it will eventually have negative consequences for the main published result.”

The production sub-index fell 0.1 points to 50.8 while the new orders were down 0.3 points at 52.4. Finished stocks fell 0.8 points to 51.9 while employment dipped 0.4 points to 51.6. The only category to show an increase was deliveries, which rose 3.6 points to 56.3.

BNZ senior economist Doug Steel said “overall, the manufacturing sector looks to be expanding, but not at a particularly rapid pace. It certainly raises questions for those looking for a strong growth pickup later in the year, government officials included”.

He noted that demand growth appears to have cooled in 2019.