Manufacturing activity during December reached its lowest level since PMI surveys began in August 2002, according to the Business NZ PMI (Performance of Manufacturing Index).
The PMI for December showed a value of 47.6. This was significantly lower than PMI values (ranging between 54 and 58.1) for December months in 2002, 2003 and 2004.
The December result means manufacturing spent five months of 2005 in contraction mode.
Activity by region showed a general decline during December. The Otago/Southland region (44.5) recorded the strong fall for the month, followed by the lowest ever result for the Central region (45.1). The Northern region (47.3) also showed a fall, although the Canterbury/Southland region (54.6) showed expansion, despite being the lowest result for that region for a December month.
Finished stocks (50.8) was the only sub-index to show expansion during December, although hovering close to the level of no-change. The deliveries (48.3) and new orders (48.1) indexes displayed similar levels of decline. The employment and production indexes both recorded a value of 46.2.
The December result continues the recent trend of diminished activity. Comments from manufacturers confirm a quieter than usual pre-Christmas period. The high value of the New Zealand dollar is still the prime issue for manufacturers across most sub-sectors, while the fall in new orders, both at the domestic and international level, raises concerns for the direction of manufacturing in 2006.
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