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The manufacturing sector continued to expand in September, with growth recorded across all regions, sectors and firms of all sizes, a report issued on Wednesday said. The ANZ-Business NZ Performance of Manufacturing Index (PMI) was 60.5 for September, up from 58.2 in August, which was the first time the new index was reported.

A reading above 50 indicates manufacturing is generally expanding while below 50 indicates it is declining. "Seasonality and preparations for Christmas were a major influence on firms over the last three months," the report said. "While some firms reported the development of new products and searching for new markets, many were too busy with existing commitments to do so."

All manufacturing industry sectors and firms of all sizes recorded expansion in September, and growth was recorded in all four regions.

The highest regional PMI was in Otago/Southland at 67.0, while small to medium sized firms had the strongest PMI at 61.7. The survey of more than 200 industrial members of employer and manufacturing advocacy group Business New Zealand found domestic demand was mixed, with some firms saying weaker dairy commodity prices were beginning to be felt in reduced spending.

"However, construction activity and solid retail sales growth, driven largely by household income growth associated with employment gains, relatively low interest rates and high immigration, were continuing to underpin domestic demand," the report said.

The September survey showed growth in production, new orders, finished stocks and deliveries, with employment the only component index to fall, to 52.7 from 53.7 in August.

New orders remained the highest component index at 64.1, up 2.9 points. - REUTERS