Strong growth in November was followed by an easing of expansion levels in December 2007.  This easing of expansion can be seen in the Business NZ seasonally adjusted PMI for December.  The PMI for December recorded 53.8, where a PMI reading above 50.0 indicates that manufacturing is generally expanding, below 50.0 that it is declining.  In November 2007 the PMI was 56.7.

Examining the sub-indexes, all five recorded expansion for the fifth consecutive month, although at a lower level of expansion.  New orders (55.4) continued to nudge slightly ahead of production (55.0) in terms of the highest level of expansion, followed by finished stocks (53.5) and deliveries (53.4).  After recording a strong result in November, employment dropped back to 51.8. 

An easing in activity and slight drop in the indices also saw the number of negative comments from manufacturers increase from 44.5% in November, to 54.3% in December.  These comments centered on the high New Zealand dollar, subdued markets and staff shortages.

To the regions, unadjusted activity for December showed the southern regions expanding and manufacturing activity in the northern regions flattening out or declining. 

Both South Island regions recorded strong results, with the Otago/Southland region recording a PMI of 60.9 and the Canterbury/Westland region recording 57.5.  In the North Island, the Northern region showed only moderate expansion with a PMI recording of 52.0, while in the Central region manufacturing activity contracted and the PMI dropped to 44.9.  This drop in activity in the Central region was evident across all the sub-indexes measured.

Looking back over the last five years, December 2007 had the second lowest level of expansion for a December month, with December 2005 being five points lower at 48.8. 

But this result is not a reflection of manufacturing across all of 2007.  Rather it should be viewed in the context of the later half of 2007, which generally saw healthy growth in manufacturing despite increasing competition from international markets, the high New Zealand dollar, and staff and skill shortages.  In addition, the average PMI result for 2007 was 55.1, compared with 53.3 for 2006, and 50.9 for 2005.