Finance & Business World

New Zealand’s manufacturing industry contracted at a faster pace in August as new orders and production slowed, adding to signs of a weaker recovery from the nation’s worst recession in three decades.

The manufacturing index was 48.7 from 49.6 in July, Bank of New Zealand Ltd. and Business New Zealand, a Wellington-based employer group, said on the group’s web site. An index below 50 indicates that manufacturing is contracting.

Companies have reined in production since April last year amid a global recession that curbed export demand and consumer spending. The Reserve Bank last week said the economy may grow just 0.1 percent in the third quarter, the first expansion in seven quarters.

“We don’t believe it spoils the recovery theme,” said Craig Ebert, senior economist at Bank of New Zealand in Wellington absolutely free credit report. “The PMI does sound a cautionary note not to get overly excited about a strong or sustained recovery just yet.”

The index is based on gauges of production, employment, new orders, finished stocks and deliveries.

The recovery in July’s index to a 16-month high had stoked expectations manufacturing was close to expanding again. Instead, the index for new orders fell to 50.3 in August from 55.4 and the production gauge dropped below 50.

Ebert said the slump in demand was exacerbated by a drop in aluminum production from Rio Tinto Group’s Tiwai smelter. Dairy and meat processing increased in the second quarter, suggesting other areas of manufacturing remain weak, he said.

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