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NZ Manufacturing Contracts, But Demand Hits Three-Year High
- Manufacturing slumps to 49.9 - below 50 in contraction
- Three of five sub-indices are also in contraction
- Despite the figures, BNZ said the economy is not as bad 'under the hood'
New Zealand's manufacturing slump returned in August, erasing July's rebound.
The BNZ-Business New Zealand Performance Of Manufacturing Index (PMI) slumped by 2.9 points to 49.9.
A reading below 50.0 indicates contraction.
BNZ senior economist Doug Steel said the data showed manufacturers are continuing to do it tough, but the economy is on the right track.
"We believe the general trend in the economy is still upwards, but indicators are often choppy around a turning point."
BusinessNZ's Director of Advocacy, Catherine Beard, said that the August results suggest the manufacturing sector has yet to turn the corner toward sustained growth.
But despite the employment, finished stocks, and production sub-indices all slumping into contraction territory below 50.0, Beard is focusing on new orders and deliveries of raw materials.
"Two of the ve main sub-index values were in expansion during August. This was led by new orders at 55.2, which encouragingly continues to trend upwards, reaching its highest level of activity since August 2022. Deliveries of raw materials at 50.5 also remained in expansion."
Steel said rising new orders and deliveries are often a signal that a recovery is coming, even if the headline data isn't showing it.
He does caution that the manufacturing recovery is off a very weak base, despite 250 basis points of easing by the Reserve Bank, and today will reinforce its pivot to more stimulus.
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