There was an improvement in manufacturing activity during March, according to Business NZ’s PMI, a survey of over 200 manufacturers.
March’s seasonally adjusted PMI, at 57.1, was 3.1 points higher than in February, and is the highest level of activity since last May. A PMI reading above 50 indicates that manufacturing is generally expanding; below 50 that it is declining.
PMI values for March in 2003-2006 were 52.2, 58.4, 51.0 and 52.9 respectively.
Business NZ Chief Executive Phil O’Reilly said the March result was positive given ongoing exchange rate concerns. “While the New Zealand dollar is still the hot issue for manufacturers, steady results in overall PMI activity over the last year have been encouraging. Time will tell whether March’s upswing in production will bring better results in coming months.”
There is still a disparity between the PMI value and the balance of positive to negative results, although the percentage of negative comments appears to have peaked for the moment. For March, the proportion of negative comments was 62%, the same as in February; however this was a significant increase from the 43% recorded in November.
All seasonally adjusted indexes showed expansion for the sixth consecutive month. Production (60.5) had the strongest lift in activity and the strongest increase from February.
Unadjusted activity in March was expansionary in all the regions examined. Canterbury/Westland (64.1) bounced back from a four month period of lower activity to be the top region in March. Otago/Southland (61.2), and the Northern (55.0) and Central (54.6) regions also showed healthy expansion.
Around 45% of negative comments mentioned the high New Zealand dollar and there are still a number of manufacturers who are unable to expand production because of ongoing staff shortages. On the positive side, some have still managed to increase offshore orders despite a high NZ$.
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