By Tracy Withers
April 16 (Bloomberg) -- New Zealand’s manufacturing industry shrank for an 11th month in March as a deepening global recession curbed demand for exports.
The performance of manufacturing index was 40.7 compared with 38.9 in February, Bank of New Zealand Ltd. and Business New Zealand said in Wellington today. A reading below 50 shows manufacturing is contracting.
New Zealand’s recession is likely to extend for six quarters, the worst in more than three decades, as a contraction in the world’s biggest economies curbs exports, the Reserve Bank said last month. Slowing manufacturing adds to signs the jobless rate could surge to a 10-year high as firms cut costs.
“New Zealand’s manufacturing industry remains in clear distress,” said Craig Ebert, senior economist at Bank of New Zealand in Wellington. “Falling activity and sales, along with collapsing profitability, is no doubt why employment is being pruned.”
New Zealand’s jobless rate rose to a five-year high of 4.6 percent in the fourth quarter and could reach 6.8 percent by the first quarter of 2010, the Reserve Bank forecasts. The economy has been contracting since the first quarter of last year.
Business confidence slid to a 35-year low in the first quarter, according to a survey from the New Zealand Institute of Economic Research published April 7. The proportion of firms expecting to fire workers was the highest since 1991.
The manufacturing index in February was at the second- lowest level since the series began in 2002. The low was 35.2 in November 2008.
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.
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