14 Feb 2014

Manufacturing sector expanded in January

6:59 am on 14 February 2014

Domestic demand has helped drive New Zealand's manufacturing sector, which expanded in January for the 16th consecutive month.

The Bank of New Zealand-Business New Zealand's seasonally adjusted performance of manufacturing index dipped to 56.2 points last month, from 56.4 in December.

However, a reading above 50 indicates an expansion in activity.

BNZ economist Doug Steel says there's strong domestic demand on the back of economic growth.

He says it's broad based and there's been a strong swing in domestic investment as construction activity picks up in Christchurch and Auckland.

Mr Steel says there has been strong agricultural income on the back of a 40 year high in the terms of trade and net immigration is also strongly positive.

He says it's expected that manufacturing growth will be maintained in 2014 as the domestic factors remain positive, and perhaps even the global situation will improve.

"While the Kiwi against the Australian dollar is high we think a lot of the positive news for New Zealand is priced into that exchange rate, so we actually see the Kiwi against the Aussie falling, more into 2015, but at least not pushing any higher in 2014."