- Catherine Beard, executive director at BusinessNZ
New Zealand manufacturing sector expanded in August, as the negative impact of the decrease in dairy prices was offset by the positive effect of the weaker New Zealand Dollar. The BusinessNZ-BNZ Performance of Manufacturing Index climbed to 55.0 in the measured month, compared with a revised 53.7 seen in the previous month. Figure above 50 signals an expansion in factory activity, while a reading below 50 indicates a contraction in the sector. Since the beginning of the year, the New Zealand Dollar has declined from around $0.72 against the US counterpart, to around $0.63 in recent weeks, giving exporters a huge boost in income and making New Zealand exports more competitive. Meanwhile, a separate report by Statistics New Zealand showed food prices in the country slipped 0.5% on month in August, after rising 0.6% in July and a 0.5% gain in June. Measured on an annual basis, food prices added 0.4%, slowing from the 1.2% increase in July.
Earlier in the week, the Reserve Bank of New Zealand slashed interest rates for the third time this year to cushion the nation's economy amid weak dairy prices and softness in construction. Moreover, the RBNZ's forecasts suggest at least one more rate cut in the coming months.
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