New Zealand's manufacturing sector showed increased expansion in August, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for August was 55.0 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 1.3 points higher than July, and close to the level of activity experienced in June.

BusinessNZ's executive director for manufacturing Catherine Beard said that a number of positive and negative factors are presently at play for manufacturers.

"Although the proportion of positive comments slipped slightly from 60.8% in July to 57.2% in August, export growth due to the decrease in the value of the New Zealand dollar remained a key comment in ensuring comments were more positive than negative. On the flip side, manufacturers also noted the adverse economic news offshore, which is causing a drop in new orders for some. Domestically, the dairy downturn continues to be felt".

"On balance, the sector remains in good heart, although many manufacturers will be keeping their eye on how international developments unfold over the next few months".

BNZ Senior Economist Doug Steel said "while economic growth is expected to slow over the coming year, the PMI results do suggest that there might be more spine to current economic activity that some seem to fear".

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