11 Oct 2013

Construction sector likely to underpin manufacturing growth

7:55 am on 11 October 2013

Growth in the manufacturing sector will be underpinned by activity in the construction sector, with residential building activity being a main driver.

The BNZ-Business New Zealand Performance of Manufacturing Index fell to 54.3 last month, down from 57.1 in August. A reading over 50 indicates expansion.

The index has been above 50 for the last 10 months and 2013 looks set to be one of the best years for the sector for some time.

BNZ senior economist Craig Ebert says that while manufacturing growth slowed in September, the sector still experienced better than average expansion, and construction activity in Canterbury will provide a boost to manufacturing.

But Mr Ebert says the global backdrop is still difficult and the exchange rate is also a headwind. He says a lot will depend on the degree to which the domestic economy can keep the manufacturing sector growing, with construction an identifiable force and not just in Canterbury but across the economy.