Better sales of manufactured metal products because of the Canterbury rebuild helped offset a fall in meat and dairy products, according to official figures.
As a result, total manufacturing sales volumes edged up 0.5 per cent in the September quarter, despite falling volumes for meat and dairy, Statistics New Zealand said today.
Economists said the latest manufacturing figures added to expectations that economic growth would be about 1.3 per cent in the September quarter, or better.
Last summer's drought saw total manufacturing sales volumes plunge 3.5 per cent in the June quarter.
Excluding meat and dairy, manufacturing sales volumes in the September quarter had their best result in more than a decade, up almost 3 per cent, and the improvement was widespread.
But that was offset by meat and dairy product manufacturing sales volumes dropping 2.7 per cent in the September quarter. The mild winter has boosted milk production since the summer drought, but that production was stored rather than sold Westpac economists said.
Metal-product manufacturing was up 6.6 per cent in the quarter, which bank economists put down to confirmation of the Canterbury rebuild gaining more steam. The higher volumes of metal products were worth an extra $129 million.
And petroleum and coal-product manufacturing was up 8 per cent or $103m.
ANZ senior economist Mark Smith said manufacturing was recovering from weak levels, but core volumes, excluding meat and dairy still remained well below historical peaks.
ANZ expected manufacturing to make a strong contribution to September quarter economic growth, with growth of 1.3 per cent expected, although it could be stronger, ANZ said.
"Looking ahead, activity in construction-related manufacturing looks to strengthen further as the Canterbury rebuild hits top gear," Smith said.
Total manufacturing sales values rose 4.7 per cent or $1.1billion in the September quarter, driven by high dairy product prices. Meat and dairy product manufacturing sales values increased 12 per cent ($768m).
The farm sector was hit by last summer's drought which reduced dairy production, but also brought forward the slaughter of stock earlier in the year because of a lack of feed.
Meat and dairy product manufacturing sales volumes fell 2.7 per cent in the September quarter. The sectors volumes slumped 11 per cent in the June quarter.
Statistics NZ industry and labour statistics manager Blair Cardno said: "Although meat and dairy volumes fell, [for the September quarter] stock levels are very high for the end of a September quarter."
Meat and dairy product manufacturing stocks were up 13 per cent in the quarter - almost $1.5 billion in value terms - compared with a year ago.
"Outside meat and dairy, we saw a broad-based increase across the manufacturing sector in the quarter," Cardno said.
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