Manufacturing sales volumes fell 3.4 per cent in the June quarter, with the summer drought hitting meat and dairy products.
Statistics New Zealand figures showed a 10 per cent fall in meat and dairy product manufacturing in the quarter. The drought early in the year "appears to have contributed to the fall".
Westpac senior economist Michael Gordon said the June quarter figures "bore the greatest brunt of the late-summer drought".
Milk production was down sharply in both the March and June quarters.
However, meat processing rose in strongly in the March quarter as farmers sent animals off to slaughter earlier than usual because of the drought.
"The early slaughter in turn left a big hole in the June quarter processing figures," Gordon said.
Manufacturing outside meat and dairy was up marginally and there was a lift in finished goods, which pointed to a positive contribution to GDP, which Westpac forecast at 0.4 per cent for the June quarter.
ANZ senior economist Mark Smith said the drought-related fall in meat and dairy manufacturing had been expected, but flat core volumes were weaker than expected.
ANZ expected a negative contribution to GDP, picking growth of just 0.2 per cent for the quarter. Rising construction sector activity because of the Canterbury rebuild would become an increasing source of growth for the manufacturing sector, but the high New Zealand dollar remained a headwind.
There was evidence of the boost from the Christchurch rebuild in today's figures with rises in wood and paper manufacturing, metals, chemicals and rubber.
Overall manufacturing was still recovering from weak levels, with core volumes still well below historic peaks.
But building-related manufacturing should pick up as the Canterbury rebuild hits top gear.
As well, the mild winter, abundant feed and a high forecast dairy payout should underpin stronger dairy-related manufacturing volumes, Smith said.
Statistics NZ said the volume decrease in meat and dairy product manufacturing was reflected in the fall of export volumes for dairy and meat products.
Export volumes were down 18 per cent for dairy products and 7.1 per cent for meat in the June quarter.
Without the fall in meat and dairy products, the volume of manufacturing sales was flat in the June quarter, up just 0.1 per cent.
Nine of 12 manufacturing sectors suffered falls in the June quarter.
Petroleum and coal product manufacturing fell 5.2 per cent.
Chemicals, polymers and rubber products were up 6 per cent.
In present prices, the total manufacturing sales value fell 2 per cent ($455 million) to a seasonally adjusted $22.3 billion.
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