11 May 2018

Manufacturing activity at two-year high

1:23 pm on 11 May 2018

Manufacturing sector activity has hit its highest level in more than two years driven by a rebound in production and new orders.

The BNZ-Business New Zealand performance of manufacturing index (PMI) rose 5.8 points to a seasonally adjusted 58.9, the highest since January 2016.

The PMI had fallen in the previous two months and there were concerns the sector's soft spot might point to a slowing economy.

BNZ economist Doug Steel said the strong recovery was at odds with the downbeat tone of recent surveys.

"April's result suggests the economy has not fallen off the rails - despite negative business confidence as measured in other surveys."

The strongest growth was in production, new orders, and deliveries, but there was also modest growth in employment intentions.

"It all points to decent growth in the second quarter, after a soft first quarter for the manufacturing sector," Mr Steel said.

Renewed strength in the building sector was put as one of the main factors in the PMI's recovery, while the weakness in primary sector industries has levelled out.

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