Activity in New Zealand’s manufacturing sector dropped further during October, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for October was 42.5 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was down from 45.1 in September, and the lowest level of activity for a non-COVID affected month since May 2009. The October result represented the fifth consecutive drop in activity levels, and significantly below the long-term average activity rate of 52.8.
BusinessNZ’s Director, Advocacy Catherine Beard said that the October result represented a further downward spiral of activity for the sector, which was seen across all the sub index measures.
“The key sub index measures of Production (41.5) and New Orders (44.1) fell back from September, with the former at its lowest level for a non-COVID month since May 2009. Employment (43.3) decreased a further 1.8 points from September, while Deliveries (42.9) dropped 1.4 points”.
The proportion of negative comments stood at 65.1%, which was down from 68.8% in September and 66.7% in August. Numerous manufacturers noted both softening orders, as well as patchy/slowing sales for October.
BNZ Senior Economist, Doug Steel stated that “today’s PMI is not a good look for GDP and employment growth. Our GDP forecasts already include a decline in the manufacturing sector in the second half of 2023. There’s a chance that decline is bigger than we think, if the PMI does not bounce in the final months of the year”.