A PMI reading above 50.0 indicates that manufacturing is generally expanding, while a reading below 50.0 indicates manufacturing is declining. 

 

Last month we forecast that the September 2007 PMI would remain in the 54 to 55 range, as the exchange rate drops and employment remains stable. Business New Zealand reports that the NZ$ still remains a primary issue for manufacturers this month. However, it is the volatility rather than the level of the dollar that is producing negative comments among manufacturers this month. This volatility is impacting on business decisions.    

 

The September 2007 PMI was the third highest this year, the 54.6 was 1.2 points below the highest figure recorded for the year of 55.8 in January. In comparison with previous September months, the September 2007 result is 2.6 points above that seen in September 2006, 3.1 points above that seen in September 2005, and 1.4 points below that seen in September 2004. However, when we look at the indices it is interesting to note that employment in 2004 was also 3 points above that recorded in September 2007. 

 

Unadjusted manufacturing activity in September showed all regions in expansion with the strongest levels in the southern regions. Otago/Southland region (66.9) was ahead of Canterbury/Westland region (62.6) this month, but both were well ahead of the Northern and Central regions where activity was 51.8 and 51.7 respectively. 

 

PMI figures for production, employment, new orders, finished stocks, and deliveries remained strong this month. Production had the largest increase last month, but dipped from 58.9 in August to 55.0 in September. As a result, new orders were the leading index for this month at 57.4. Employment (50.3) showed little change, moving from 50.3 to 50.2.