Good news for manufacturing

The manufacturing sector expanded last month for the first time since April 2008, according to the BNZ Capital - Business NZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for September stood at 51.7. A figure above 50 indicates the sector is generally expanding.

It had been a long time between drinks for the sector, Business NZ chief executive Phil O'Reilly said.

"One positive result should not mean we anticipate strong upward growth," he said.

Four of the five sub indices displayed expansion. New orders, at 56.3, again led the way with its highest result since November 2007, while production, at 51.6, bounced back from a decline in August.

Employment, at 51.2, displayed positive growth for the first time since January 2008.

Deliveries of raw materials, at 51.1, continued to improve. Finished stocks, at 44.4, was the only sub-index continuing to show decline.

The high NZ dollar was seen as a negative for the sector.

BNZ Capital economist Mark Walton said that while the NZ dollar had appreciated strongly, the Australian dollar cross had remained fairly stable.

"Australia is still growing as our biggest export market, and is leading the pack of developed countries out of the recession - with GDP growth that has remained in positive territory throughout," he said.

A regional breakdown showed Otago/Southland, on 58.7, led the way.

The northern region, on 52.8, recorded its first expansionary result since December 2007, while the Central region, on 50.7, dropped 1.6 points from August.

Canterbury/Westland, on 53.3, fell back from the previous month, but continued a run of three consecutive expansionary results.

- NZPA