Manufacturing sales in New Zealand fall in Q1 on decline in dairy and meat output

Statistics New Zealand today stated that the total manufacturing sales of New Zealand declined in the first quarter of 2016, driven by a decline in dairy and meat product manufacturing. Seasonally adjusted manufacturing sales volumes declined 1.2% on sequential basis in Q1, as compared with the growth of 0.8% q/q seen in the fourth quarter of 2015.

Manufacturing volumes of meat and dairy products dropped 7.8% quarter-on-quarter, in line with a severe decline in livestock slaughtering in the quarter.

The “core” sales volume for total manufacturing excluding dairy and meat grew 0.7% q/q. Out of 12 core industries, eight industries recorded growth in sales volumes in Q1 2016. Coal and petroleum manufacturing led the gains, growing 5.4% q/q. Meanwhile, transport equipment, machinery and equipment manufacturing was up 2.2% q/q whereas chemical manufacturing dropped 4.2% q/q.

According to Statistics New Zealand, the trend for total manufacturing sales volume, which gives a longer-term picture of movements, appears to be flattening after recent rises.

The seasonally adjusted core manufacturing sector inventories are estimated to have dropped 1.4% q/q, said ANZ in a research report. This does not imply that the overall production volumes might not have been firm as suggested by the sales figures, added ANZ.

The manufacturing sector of New Zealand continues to outpace global peers. New Zealand continues to record a decent growth figure in spite of subdued demand and over-capacity problems that are impacting the manufacturing industry globally. Moreover, the strong New Zealand dollar is not hindering the industry performance significantly.

The manufacturing sector seems to be leveraging from the booms seen in the construction sector. Given that the latter continues to grow, the manufacturing sector in New Zealand is likely to keep performing strongly, according to ANZ.