New Zealand’s manufacturing sector saw a positive start to 2023 after three consecutive months of contraction, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for January was 50.8 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 3.0 points up from December, although still well below the long-term average activity rate of 53.0.

BusinessNZ’s Director, Advocacy Catherine Beard said that the January result managed to show a small degree of expansion during January, although whether the sector can keep its head above water as we look further into 2023 remains to be seen.

“While Production (52.1) recorded its highest result since August 2022, the other key sub-index of New Orders (48.8) has now been in contraction for five consecutive months, which last occurred in 2009. Employment (51.0) picked up after three consecutive months in contraction, while Finished Stocks (52.6) returned to positive territory”.

Despite the lift in activity, the negative mindset of manufacturers continued to pick up pace, with the proportion of negative comments at 69.9% for January. This compares with 63.5% for December, 58.4% for November and 61.6% for October. Supply chain issues were repeatedly mentioned, along with continued labour shortages and falling orders.

BNZ Senior Economist, Craig Ebert stated that “New Zealand’s manufacturing base appears to have reclaimed a sense of stability, and by doing so it meant New Zealand’s PMI wasn’t all that different to what the global PMI did in the month”.