New Zealand Manufacturing Industry Contracts for a Third Month

New Zealand manufacturing contracted for a third month in September amid weak domestic orders and a rising currency, a private survey showed.

The performance of manufacturing index rose to 48.2 from a revised 47.4 in August, Bank of New Zealand Ltd. and Business New Zealand said in an e-mailed report today. An index less than 50 shows that the industry is contracting.

The New Zealand dollar’s 5 percent gain this year makes it the best-performing Group of 10 currency and has curbed returns from exports and prompted manufacturers such as Norske Skog to reduce production and fire workers. Prime Minister John Key has dismissed calls from his political opponents to weaken the currency to help struggling businesses.

“Talk that the industry is in crisis is overblown,” Craig Ebert, senior economist at Bank of New Zealand in Wellington, said in the report. “While the data are worryingly weak, they are about current conditions rather than the way ahead. Expectations for output over the next three months remain positive.”

Four of the five sub-indexes were in contraction, with the new orders gauge falling to the lowest since May 2009, today’s report showed.

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

To contact the editor responsible for this story: Shamim Adam at sadam2@bloomberg.net

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