2016 was a positive year – how will 2017 fair?
2016 was a positive year for NZ manufacturing and saw consistent expansion throughout the year. Catherine Beard, Business NZ’s executive director for manufacturing, said that the results were encouraging.
The activity in the manufacturing sector over 2016 averaged out at 56.0. This showed an increase from 54.2 in 2015, but interestingly the same result as both 2014 and 2013. Overall, this shows how consistent and how positive the activity has been for the sector over the last few years.
There is also a very positive feeling around the manufacturing sector and positive comments stood at 70% for December, with seasonal factors (particularly Xmas) having a strong influence.
BNZ Senior Economist, Craig Ebert, said “the December result caps off a positive year for the manufacturing sector. Indeed, since the survey started in 2002, last year’s average has only been surpassed by 2004’s 57.5”.
So what can we expect for the new year?
The general consensus is that the NZ Manufacturing sector is in good shape and that 2017 will continue to expand at a steady rate. However, Economist Doug Steel does feel that there could be a few warning signs that should not be ignored.
In December PMI new orders fell to 52.6 in December, which still indicates growth but it is the lowest level of new orders for nearly two years. Therefore this is worth watching over the next quarter as an indicator of sale growth ahead. The industry’s new orders also slowed a bit in the QSBO (qrtly survey of business opinion).
Having said that it appears that manufacturers in the QSBO are more confident this year than last. A net 23% expect better economic conditions over the coming six months. This compares to a net 4% expecting improvement in the previous survey. It’s a decent lift and sets confidence well above long-term norms, of -6.
So, let’s continue doing what we are doing NZ and make our country proud of what we add to the economy and the manufacturing sector around the world.