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ANZ analysts note that the New Zealand manufacturing is a clear outlier at a time when globally, manufacturing output is slowing, reflecting the fact that volumes have been supported by meat and dairy production, which in the short run tends to be driven more by the weather than demand.

Key Quotes

“Global demand fluctuations do turn up in meat and dairy export values, via commodity prices. But so far these have held up remarkably well to the slowing in global growth. Outside of meat and dairy, manufacturing growth has softened.”

“Fluctuations in export demand tend to flow through to volumes, while domestic consumption of manufactures tends to be heavily influenced by construction. While it is possible that New Zealand manufacturing may continue to outperform international peers, downside risks are accumulating and acceleration in growth from here seems unlikely.”