Source: Radio New Zealand
File photo. 123rf
- Manufacturing activity eases marginally to 53.2 from 54.8 in February – above 50 is expansion
- All five sub-indexes positive, growth slows in production, new order, and deliveries
- Firms may have moved to cushion Middle East conflict impact by stockpiling, building up inventory
- Sharp lift in negative comments about business outlook, as conflict clouds outlooks
Manufacturing sector activity remained resilient in March and has yet to be significantly hit by the Middle East conflict.
The BNZ-Business NZ Performance of Manufacturing Index (PMI) slowed to 53.2 from 54.8 the month before. A reading above 50 indicates the sector is expanding.
“The PMI result supports our view that economic growth was reasonable in the first quarter of the year, even though material headwinds had accumulated by quarter’s end,” BNZ senior economist Doug Steel said.
All five sub-indices stayed in expansion with gains for employment and finished stocks, and a slowing for new orders, production, deliveries of raw materials.
Steel said the sector was resilient, although it was likely too early for the conflict to have had a significant negative impact on activity.
“While the PMI is no longer trending higher, it hasn’t been unduly hit by the fuel price surge and uncertainty of war. At least not yet.”
“There is evidence of some temporary PMI support from spending being brought forward and businesses stockpiling.”
However, the level of negative comments from firms about their outlook rose markedly to 62 percent from 44.5 percent.
“While the PMI only eased a touch, the drop in positive comments suggests the energy price shock is front of mind for many,” Steel said.
He said it was difficult to forecast how the Middle East would end up, with manufacturing activity rising and falling in line with commodity price moves, which at the moment were being driven by a supply shock.
“Currently rising prices are more likely to dampen manufacturing activity and economic growth, both in New Zealand and abroad.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
