New Zealand’s manufacturing industry expanded at the fastest pace since May, led by demand for materials to rebuild earthquake damage in Christchurch. The currency rose to the highest in more than a week.
The Performance of Manufacturing index rose to 55.2 in January from a revised 50.4 in December, Business New Zealand and the Bank of New Zealand Ltd. said in a statement released in Wellington. An index over 50 means manufacturing is expanding.
Manufacturing output is being buoyed by demand for cement and wallboard in the South Island city of Christchurch, where rebuilding is under way after earthquakes in 2010-11 devastated the nation’s third-biggest city. Central bank Governor Graeme Wheeler has said he is monitoring reconstruction progress to gauge emerging pressure on resources and inflation.
“Over the coming years, we anticipate the positive flow-on effects of a stronger construction sector to broaden to other parts of the manufacturing sector,” Doug Steel, economist at Bank of New Zealand Ltd., said in the statement.
New Zealand’s dollar rose to 84.52 U.S. cents at 11:35 a.m. in Wellington, from 84.15 cents immediately before the release. It touched 84.63 cents, the strongest since Feb. 5.
The gains in manufacturing were led by production and new orders, today’s report showed. Employment in the industry remained in contraction. The challenge for manufacturers in 2013 is slowing demand in Australia, which buys about a quarter of all New Zealand’s exports, Steel said.
“Comments regarding the Australian market from respondents have been getting increasingly downbeat,” he said. “In January they turned decidedly sour.”
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