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Auto manufacturing - Source: ONE News -
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Business NZ says a slip in manufacturing figures for October is a reminder that the sector's recovery should be tempered with caution.
The Business NZ-BNZ Capital Performance of Manufacturing Index (PMI) for the month was 0.9 points below September, but at 50.6, the sector was still expanding.
A PMI above 50.0 suggests the sector is expanding, and below that contracting.
The fall comes after the sector lifted out of contraction in September for the first time since April 2008.
Of the five categories making up the index, just two - production and new orders - expanded, and not as strongly as in September.
The other three categories - employment, deliveries of raw materials and finished stock - were all in contraction.
Of the industry's sub-groups, the food, beverage and tobacco sector recorded the highest expansion for the month.
Business NZ CEO Phil O'Reilly says that despite the drop in the overall result, there was a significant fall in the proportion of negative comments from the survey's respondents.
"Discussions around the general effects of the recession linger, but those recording positive aspects note the build up in orders and activity as part of the pre-Christmas rush, while others have secured contracts previously put on hold by the customer," he says.
However, he says concern about the high New Zealand dollar, which has been hovering around 74 US cents, remain.
BNZ Capital senior economist Craig Ebert says the October result is a sign of things to come.
"It's unlikely to be all strongly onwards and upwards from here. The economic improvement we envisage still looks like being a gradual one, choppy in its composition, and not without risks of major disappointment," he says.
New Zealand's manufacturing sector is not expanding as strongly
as it is globally, with the JPMorgan Global PMI for October having
hit a 39-month high of 54.4.
PMI in the United States strengthened to 55.7 and in Australia
dipped 0.3 points to 51.7.
