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Source: ONE News -
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Manufacturing activity dipped in August after recording a 16-month high in July.
The BNZ Capital - Business NZ Performance of Manufacturing Index (PMI) fell 0.9 points to 48.7 as a result of lower production and new orders activity.
A PMI above 50.0 suggests that manufacturing is expanding, and below 50.0 contracting.
The August results compares with an average of 52.9 over the years 2002-2008, though manufacturing has been operating in a tough environment over the last 18 months with the economy in recession.
Business NZ chief executive Phil O'Reilly says the latest result is disappointing after signs the sector was clawing its way back over the last two months.
"July's result was the closest one to expansion since April 2008, so a positive result for August would have broken a long drought for New Zealand's manufacturing sector," he says.
O'Reilly says the downwards movement of production and new orders reflects lingering concerns about the state of the general economy.
However, he says employment was at its highest level since May 2008 - a sharp improvement from one of its lowest results in June.
BNZ Capital senior economist Craig Ebert says the slippage in activity is a reminder that the shape of economic recovery is uncertain.
"This downfall has come amid the worst global economic performance in many a decade and more so in respect to trade and manufacturing. In this respect, New Zealand can be especially thankful it's not a producer of vehicles," he says.
Positive signs were seen in the food, beverage and tobacco sub-sector, which gained 4.5 points on last month, putting it firmly in expansionary territory at 56.3.
Meanwhile, the petroleum, coal, chemical and associated products sub-sector experienced a sharp fall to end at 46.8.
Regionally, results were similar to July, with Northland down marginally, and the Central and Canterbury/Westland regions remaining in expansion.
Compared with overseas, New Zealand's manufacturing activity was behind Australia, which recorded a PMI of 51.7, and the US on 52.9.
The global PMI for August was 53.1
