18 Jan 2019

Manufacturing sector ends year on strong note

12:41 pm on 18 January 2019

The manufacturing sector ended last year on a strong note, easing concerns of a slowdown.

Q-West Boat Builders welding fabricator Grant Loveridge works on a new ferry for the Auckland market.

The manufacturing sector has been gradually improving after a mid-year weak spot, the BNZ said. Photo: RNZ / Robin Martin

The BNZ-Business New Zealand Performance of Manufacturing Index rose 1.4 points to 55.1 in December from the month before. It was the PMI's highest level since last April.

Four of the index's components increased, notably production, deliveries and stocks.

BNZ senior economist Craig Ebert said the sector had been gradually improving after a mid-year weak spot and the strength in new orders was pleasing.

"This helps allay concerns ... of weakening demand."

However, he noted that a business survey released earlier this week showed manufacturers were the most pessimistic, with concerns about a possible slowdown and concerns that rising costs will eat into their profits.

"NZIER's Quarterly Survey of Business Opinion (QSBO) registered a tone of struggle regarding manufacturing output over the prior three months... So there are still elements of caution there," Mr Ebert said.

Earlier this week, two surveys showed strong confidence in the labour market and a pick-up in business sentiment.