New Zealand manufacturing recorded increased expansion in June, according to the latest ANZ-Business NZ Performance of Manufacturing Index (PMI).

New Zealand’s PMI value increased from 54.1 in May to 62.2 in June (a PMI reading above 50 points indicates expansion and below 50 indicates decline). This remains 9.0 points higher than June 2003, when a lift in activity from May to June was also recorded.

All five sub-indexes recorded expansion in June, led by new orders (67.7), which continues as the highest sub-index throughout 2004, indicating further expansion in the future. The production and deliveries of raw materials indexes also recorded strong expansion with values over 60, while the employment and finished stocks indexes experienced moderate expansion.

All regions continued to record expansion, with the Northern region indicating the strongest level, closely followed by Canterbury/Westland. The Otago/Southland region continued to record a stronger level of expansion, but was still 5.6 points lower than in June 2003.

The machinery & equipment sector noted a strong increase in orders during June, notably from overseas. A lack of raw materials was hindering the metal product sector from further expansion, and although the textiles, clothing, footwear & leather sector recorded overall expansion for June, comments reflected a seasonal fashion cycle as sales had dropped from May.

Export activity was generally positive across firms for June, with many reporting a pick-up in new orders from standard exporting countries such as Australia and the US, as well as emerging markets such as China. Increases in the cost of raw materials from abroad in the chemicals sector continue to be reported as concerns, while exchange rate growth had cooled off any further gains in exports for the wood & paper product sector.