Falling exchange rate drives growth in New Zealand manufacturing

Growth in New Zealand's manufacturing sector accelerated last month despite uncertainty about the global economy and the downturn in commodity prices, according to the latest performance of manufacturing index (PMI) out Friday.

The BNZ-Business New Zealand PMI for August was 55, up 1.3 points from June, on a scale where above 50 indicates expansion and below 50 contraction.

Business New Zealand executive director for manufacturing Catherine Beard said the fall in the value of the New Zealand dollar was a key positive aspect in the growth of exports.

"On the flip side, manufacturers also noted the adverse economic news offshore, which is causing a drop in new orders for some. Domestically, the dairy downturn continues to be felt," Beard said in a statement.

"On balance, the sector remains in good heart, although many manufacturers will be keeping their eye on how international developments unfold over the next few months."

BNZ senior economist Doug Steel said in the statement that while economic growth was expected to slow over the coming year, the PMI results suggested "there might be more spine to current economic activity that some seem to fear." Endi