NZ manufacturing drop surprises analysts

Labour has been trying hard to generate the impression of a manufacturing crisis and National have also been working hard to try and dispel that impression.

As an objective right wing commenter I don’t have much truck with the claims of either of these left wing socialist parties. David Farrar has been doing his best at Kiwiblog to combat the left’s claims with a number of posts alluding to the “manufactured manufacturing crisis”.

The last one I think was this one, where I made the following comment-

Well, not trying to be a wet blanket (perish the thought) but I see the chart headed Domestic and Export Sales Expectations has dropped sharply from 50% expecting an increase to only 10%.

This seems to substantially undermine the whole “things are looking rosy” scenario.

Kiwiblog readers are pretty much a majority of National supporters and any criticism of the Nats from a right wing perspective generally gets as many down votes as comments from the left. I see my comment received two ups and four downs.

However time has proved I may have been quite right in my reservations. From RNZ.

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.

My advice? Take anything you hear from establishment sources with a grain of salt.

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