New Zealand’s Manufacturing Contracts Amid Recession

By Tracy Withers

Feb. 12 (Bloomberg) -- New Zealand’s manufacturing industry shrank for the ninth month in January as a deepening global slowdown curbs demand for exports, keeping the local economy mired in its own recession.

The performance of manufacturing index fell to 42 from with 42.5 in December, Bank of New Zealand Ltd. and Business New Zealand said in Wellington today. A score below 50 shows manufacturing is contracting.

New Zealand’s recession, which began in the first quarter of 2008, is being prolonged by a contraction in the world’s biggest economies that has curbed exports and prompted companies to fire workers and defer expansion. Slowing manufacturing adds to signs the jobless rate could surge to a 10-year high.

“The overall picture is one of ongoing tough times for manufacturers,” said Phil O’Reilly, chief executive of Business New Zealand, a lobby group. “The weakness in production and new orders remains a primary concern.”

New Zealand’s jobless rate rose to a five-year high of 4.6 percent in the fourth quarter. The Treasury Department forecasts the rate could reach 7.2 percent by the first quarter of 2010.

The manufacturing index’s in January was at the second- lowest level since the series began in 2002. November’s index reading was the record low of 35.2.

The index tracks production, new orders, employment, stocks and deliveries.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.