Manufacturing activity crept into expansion in December, but softness in employment, new orders, and finished stocks suggests the sector's performance was largely flat.

The seasonally adjusted Business New Zealand Performance of Manufacturing Index for the month came in at 50.1 - 1.3 points higher than the previous month.

A reading above 50 shows the sector is in expansion, while a reading below 50 suggests it's in contraction.

Looking behind the headline number, production was the only sub-category to show any pick-up in activity in December with a reading of 52.5, recovering from a decline in November.

New orders and finished stocks fell back into contraction at 48.9 and 48.8 respectively.

Employment activity came in at 49.1, mired in a tight contraction band for a fourth month, and deliveries were mostly flat at 49.9.

The data shows that while factory activity fell across all regions in December, the Northern region saw the biggest declines at 48.4, down 8.2 points from the previous month. Activity in the central region fell 5.4 points to 46.3 in the month, its first contraction since April.

The South Island remained in expansion in December, albeit on a softer basis.

Activity in Otago/Southland fell five points to 60, and the Canterbury/Westland region dropped 8.6 points to 53.4.

On an industry basis for December, food, beverage & tobacco experienced a decline in expansion levels to 65.6, and machinery and equipment manufacturing fell into contraction to 48. Metal product manufacturing declined from the previous month to return to levels of contraction experienced in October at 41.9.

Despite the weakness in the numbers, the survey showed there was only a small drop in the proportion of positive comments in December to 56.6 per cent compared to 57.6 per cent in November.

- © Fairfax NZ News