Manufacturing activity contracted for a fourth consecutive month despite some signs of recovery emerging in the country's economy, a new survey shows.
The Bank of New Zealand - Business NZ performance of manufacturing index (PMI) fell three points from July to a seasonally adjusted 45.7 in August, which was similar to the result for June (a 50 plus PMI indicates expanding manufacturing activity; below 50 indicates a contraction).
The four consecutive months of decline confirmed in the latest survey equals the previous longest period of contraction which occurred in late 2005 and early 2006.
BNZ head of research Stephen Toplis said the survey was "quite disconcerting in its negativity".
Of most concern was the drop in the production diffusion index to 42.3 points, the lowest level in the six year history of the series, and ongoing weakness in new orders.
Toplis noted several indicators in the wider economy had started "to find their feet again" but other factors warned of an outlook that was more dire.
Overall, he was optimistic a combination of rapidly easing monetary conditions, and that coming substantial fiscal stimulus would result in a much stronger economy.
Business NZ chief executive Phil O'Reilly said there were some encouraging aspects with the August result, namely comments around the drop in the New Zealand dollar over the last month.
However, manufacturing production continued to struggle while the sector had also seen a contraction in employment levels during the past seven months, he said.
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