The Bank of New Zealand – Business New Zealand Performance of Manufacturing Index (PMI) stood at 43.7 in April 2009, an improvement from the 41.9 recorded in March and 39.0 in February.

Manufacturing indice results for April were a slight improvement on March, but are similar to what we have seen over the last 11 months. These results indicate that manufacturing activity is continuing to contract, so while this contraction has improved slightly on the previous month now is not a time to rejoice. This point is best illustrated below where the figure indicates that the three-monthly average for the PMI in April was 39.7. This is the lowest three-monthly average for April since the survey began in 2002 and well below the three-monthly averages for April seen between 2003 and 2007.

This month, all five sub-indices measured recorded a value above 42. Again, while this is an improvement on the previous month these values are well below the 50 mark indicating that manufacturing is not out of the woods yet.

Taking a look at the sub-indices, two positive notes include production moving above 40 for the first time since December 2008 to sit at 42.7 in April, and employment improving by 5.8 points on the previous month to sit at 44.8. The indices for the delivery of raw materials and finished stocks have continued to remain fairly consistent; the indices for finished stock declined slightly to 46.3, indicating that some firms are continuing to run down their inventories, and deliveries increased by 2.4 points to sit at 43.6. New orders moved from 41.0 in March to 42.8 in April, but looking at three-monthly averages the indices for new orders is sitting below 40.

So while this slight improvement means it is not quite time to write the obituary for manufacturing just yet, the next few months will remain challenging for this sector.