While manufacturing in Otago has ended a two-month regional winning streak, with a slight decline recorded in December, figures reflect a return to a more stable position overall, the Otago Southland Employers Association says.
The BNZ Capital and Business New Zealand seasonally adjusted performance of manufacturing index for November was released yesterday, its highest December level for two years.
An index reading above 50 indicates manufacturing expansion, and below 50, contraction.
Business NZ chief executive Phil O'Reilly said the last four months of 2009's index readings were positive, following 16 months of decline.
The first half of 2009 continued on from 2008, which was the worst year since the survey began, but the following six months revealed a trend towards moving out of decline and recovering some lost ground in the manufacturing sector, he said.
"The level of expansion is still fragile, with future expansion in 2010 partly dependent on the direction of the New Zealand dollar," Mr O'Reilly cautioned.
Nationally, the index was up 1 point from November to 52.9 for December, its highest level of expansion since December 2007.
Regionally, Otago was knocked off its two-month perch by the Northern region at 52.6 points, followed by the Otago/Southland regions and Canterbury/Westland equal on 52.2 points and the Central region trailing at 51.7 - the smallest gain during the month.
Otago Southland Employers Association chief executive John Scandrett said the degree of steadiness in regional outcomes for December was mirrored in Otago/Southland.
"The local December reading was 52.2 points.
While this falls somewhat short of what was for us a strong November outcome, we can welcome the fact that we are now seeing relative consistency come into manufacturing index trending patterns at this end of the country," he said in a statement yesterday.
The December index recorded positive regional comments across the food and beverage, wood and paper, printing and publishing and textile, clothing and footwear industry groupings, but less positive references were made by metal products, machinery and equipment industry parties, Mr Scandrett said.
"[However] the proportion of negative comments made by survey respondents through recent months is tracking downwards consistently now, and this has to be good for the manufacturing sector within our region," he said.
Mr O'Reilly said Australia remained an important customer base, and with the "lucky country" faring better than most during the recession, increased comments from respondents regarding further demand from Australia may help pull activity up to levels more consistent with 2006-07.
Bank of New Zealand senior economist Craig Ebert said manufacturing was beginning to climb "out of a big hole".
"While hardly raging away, it was the best level in two years.
The same could be said for the production and new orders components of the manufacturing index," he said.
The manufacturing index reflected last week's earlier, separate, manufacturing results from the quarterly survey of business opinion, revealing a net increase of production in the final months of 2009; increasing from a slight contraction reported for the prior third quarter, Mr Ebert said.
"The production recovery would seem to be coming as much from domestic sales as export sales," Mr Ebert said.
Manufacturing indices for December
Expansion
Production: 54.1
New orders: 57.2
Raw material deliveries: 52.9
Contraction
Employment: 48.7
Finished stocks: 47.5
