Manufacturing sales volumes jumped by 3.5 per cent in the September quarter after two quarters of flat to falling sales. Much of the strength was concentrated in the primary sector, with strong gains in meat, dairy, fruit and beverages.
According to Michael Gordon, senior economist at Westpac, the details of the survey indicate that some of the strength in sales was derived from a rundown of stocks. “In particular, the strong lift in dairy exports over the September quarter contrasts with the known drop in milk production,” he says.
“A quick adjustment for changes in stocks suggests that manufacturing production – the relevant concept for GDP – rose by about 1.5 per cent over the quarter.
“The manufacturing survey is the last major indicator before the release of September quarter GDP next Thursday. We will finalise our forecast tomorrow, but with strong gains in both manufacturing and wholesale trade, our current estimate of 0.7 per cent growth may be revised higher.”