12 Feb 2015

Drop in manufacturing activity

1:33 pm on 12 February 2015

Manufacturing activity has slowed sharply.

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Photo: 123rf

The BNZ-Business New Zealand's Performance of Manufacturing Index tumbled 6 points to 50.9 in January compared with the previous month.

A reading of above 50 indicates expansion.

Manufacturing activity tends to be quieter in January due to the holidays but the drop is more pronounced than BNZ economists were expecting.

While they are cautious about reading too much into one month's figures, the result did throw up some potentially worrying news.

Production contracted for the first time since August 2012, while firms reported flat new orders and a build up in inventory. That indicates demand has weakened and raises questions about economic growth this year.

BNZ is not overly concerned at the moment, pointing out confidence remains high while construction activity should underpin manufacturing and the economy.

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